How to make sure that your wife will receive 100% of term insruane amount without any hurdle or legality? Don't let your spouce to face the situation like this lady facing after her husband's death.
A comment in my blog...
A comment in my blog...
Hello Sir,
My husband has passed away recently, he has taken term insurance in the year 2020, with me as 100% nominee. I have a 3-year old son. My mother in law now claims she has 1/3rd share as per Hindu Succession Act.
My husband has passed away recently, he has taken term insurance in the year 2020, with me as 100% nominee. I have a 3-year old son. My mother in law now claims she has 1/3rd share as per Hindu Succession Act.
When you buy a term life insruance, you nominate your family members and feel that they receive the claim amount in case of death. However, life is not so simple. Read below comment in my blog
The answer is Married Women's Property Act or MWP Act. What is this?
Let us see few live examples where your term life insurance benefit may not be handed over to your family (wife and kids).
# Suppose Mr. A has a home loan of Rs.1 Cr and he has Rs.2 Cr Term Life Insurance. In such a scenario, if sudden death of Mr.A may prompt the lender to approach the court and claim the dues from your life insurance proceeds.
Post settlement, your family may end up with an Rs.1 Cr benefit from insurance proceeds rather than your assumed benefit of Rs.2 Cr
# Assume that you are a businessman and you owe money to someone. After your death, the creditors may approach the court and they will get the money out of your life insurance proceeds.
# If you have not created your will and there are family members who claim their right in your life insurance proceeds. Here, family means other than wife and kids.
# In the future may be due to certain family issues, you may don’t want the life insurance proceeds may not benefit your wife and kids
How well are you prepared for such situations especially if such situations happen in your absence? There is a way to protect your wife and kids from such scenarios under the law. This is called as MWP Act or Married Women’s Property Act.
The Married Women’s Property Act, 1874 came to force on 24th February 1984. According to MWP Act. the earnings of a married woman in India are considered her own property and this Act Protects the property owned by a woman from Creditors, relatives, and even their husbands.
MWP Act 1874 under which Section 6 deals with life insurance. If you buy life insurance under MWP Act, then it will protect the women’s right on the life insurance proceeds money in all cases. Even the husband can’t do anything about it once the buying is bought under the MWP act
This applies to all kinds of insurance policies be it a ULIP, term plan, or an endowment/money-back plan.
It means that the proceeds of insurance policy shall be received and kept by the Official Trustee same as trust reposed on the insurance policy. It is guarantees that the proceeds from life insurance policy are free from any creditors or court attachments.
If the creditors prove that husband took the loan with an intention to defraud, then this act will not protect your wife and kids. Hence, the intention of going for credit should not be to defraud.
The policy can be taken only on one’s own name, i.e., the life assured has to be the proposer himself. Any type of plan can be endorsed to be covered under MWP Act like Term LIfe Insurance, Endowment Plans, Money Back Plans or ULIPs.
Any married man can take a life insurance policy under MWP Act. This includes divorced persons and widowers. The policy can be taken only on one’s own name, i.e., the life assured has to be the proposer himself. Any type of plan can be endorsed to be covered under MWP Act.
At the time of buying life insurance, a separate from has to be filled by the proposer for it to be covered under MWP Act. The form will seek details of the beneficiaries, the share of the benefits that are to be accrued to them and the trustees.
Note that it can’t be added separately once you have completed the process of buying the life insurance and policy is issued (means you can’t add the MWP act later).
If you want to know more in this aspect, reger my blog post.
Term Life Insurance and MWP Act – Protect insurance from creditors and relatives
basunivesh.com
Term Life Insurance and MWP Act – Protect insurance from creditors and relatives
basunivesh.com
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