Beyond Standard Policies: Why MWPA Life Insurance Protects Women and Children

The Married Women's Property Act (MWPA) is an important safeguard for women that is often overlooked. Under MWPA, the policyholder's wife and children can be the only beneficiaries of an insurance policy. Notably, proceeds cannot be claimed by the husband, husband's creditors, husband's family, husband's relatives, or in-laws.

The policy represents a separate trust that the husband cannot alter without the consent of the beneficiaries. "Even in the case of divorce, the husband cannot change the beneficiaries, making it a strong protection for women. In addition, if the policyholder surrenders the policy, the proceeds still go to the wife and children. These airtight provisions ensure that the proceeds can never go to anyone but the beneficiaries," says Pranjali Madnani, director, estate planning, Agnam Trustees and Family Office (Agnam Advisors LLP). 

How It Differs From A Standard Life Insurance Policy 

The proceeds of a standard life insurance policy can be claimed by creditors. The husband can also use standard life insurance as collateral for loans and to pay off debts. The beneficiaries can be changed anytime, allowing any family member to be chosen as the beneficiary. Beneficiary selection is not limited to wives and children.

Therefore, a standard life insurance policy will not necessarily provide creditor protection, immunity from family claims, or post-divorce beneficiary rights. 

However, all these shields are guaranteed under MWPA. "This makes the MWPA policy a stronger protection against the above than a standard life insurance policy," says Madnani.

What You Need To Know 

This extremely beneficial provision remains largely unused mainly because of ignorance and lack of understanding. Some of the barriers for men could be not being able to use a policy taken out under this act as security for borrowing, and not being able to change the beneficiaries even on divorce. Men need to be aware that a policy taken out under the MWPA can secure their wives and children in the event of their death.

Women need to know that when buying a new life insurance policy, the MWPA must be invoked and cannot be added retrospectively. "They need to know that the beneficiaries of such a policy can only be the wife and children (if they are indicated as beneficiaries) and that they do not have to give in to family and inferences from relatives not to take their legal entitlement by way of policy under MWPA," says Madnani.

It is important to understand that the requirement of having a policy under the MWPA is not a complicated or time-consuming provision. It is very simple, requiring a simple add-on to be signed at the time of buying the policy, and involves no other costs.