The Impact of The Married Women's Property Act on Term Insurance

Term insurance is an important tool for protecting your family's financial future. It's designed to provide a lump-sum payment to your beneficiaries if you pass away during the policy term. Before 1874, married women in India could not own property or have inheritance rights. However, the Married Women's Property Act of 1882 has significantly impacted how term insurance policies are structured and how they can be used. In this article, we'll explore the Married Women's Property Act, how it affects term insurance policies, and why it's important to understand this law.

What is the Married Women's Property Act(MWPA)? 

In 1874, the British Raj enacted the Indian Married Women's Property Act to safeguard married women's interests. It offered women access to their own property and any inherited property. The Married Women's Property Act was amended in 1923 to include Term Life Insurance. Moreover, the married woman could also choose what she wanted to do with the property. Whether she wanted to hold on to the property and assets, sell it, or bequeath it to others, the choice was hers alone.  

One of the biggest disruptors in British India that still finds a place today, the Indian Married Women's Property Act forced citizens to unlearn and relearn their attitudes and policies towards women. The Act heralded a new era in women's independence and helped them receive, or stake a claim, in their rightful belongings, assets, money, and property. 

What is The Married Women's Property Act in insurance?

Buying a Life Insurance Policy is straightforward, but the process of ensuring the death benefits or savings go to their beneficiaries may not be so straightforward. The money that they've worked so hard to save should end up with their loved ones, instead of being claimed by creditors, repo agents, or loan sharks. The policyholder's money or property can be claimed after death if they have left an outstanding loan or owe money to others. 

The original Married Women's Property of 1874 was updated in 1923 to extend to Term Life Insurance policies that went to a married woman and/or her children. 

The 1923 Married Women's Property Act safeguards the woman's property and assets - which include Term Life Insurance - from relatives and her husband. According to the Married Women's Property Act, when a married man buys a Term Life Insurance plan under the Act, only the wife and children named in the policy will receive the amount, and no one else. In fact, even the policyholder cannot claim any amount! 

Benefits of buying Term Life Insurance Under The Married Women's Property Act

Buying a Term Life Insurance Policy under the Married Women's Property Act ensures that the policyholder's wife and children are the sole beneficiaries of the death benefit. Here are other benefits.

• When the policyholder purchases a Life Insurance Policy under the Married Women's Property Act, he is buying it only for his wife and children. The beneficiaries should be identified and stated in the insurance policy when the policyholder first purchases it.  

• Purchasing a Life Insurance Policy with the Married Women's Property Act is applicable to all religions. 

• The person who buys the policy can split up the amount according to what his wife and children, respectively, require. However, these amounts must be specifically mentioned in the policy, and cannot be amended. 

• Life Insurance Policies with the Married Women's Property Act are like a trust. The policyholder doesn't have to create a separate trust for the beneficiaries. This trust belongs solely to the wife and children of the policyholder. 

• Normally, creditors can claim the death benefit of life insurance if the policyholder died with outstanding amounts and debts. When a woman or a man buys a Term Life Insurance Policy under the Married Women's Property Act, it ensures that creditors cannot claim any amount from it. 

• The policyholder mitigates the risk of family disputes especially if his beneficiaries live as part of a joint family system. Other family members cannot claim the death benefit because it is protected under the act and reserved for wife and children only. 

Impact of divorce on a Term Plan bought under The Married Women's Property Act

The last thing on a divorced person's mind would be considering their Term Life Insurance! However, identifying and securing their insurance, payout if any, and clearing any dues or settlements should be a priority when they're no longer married to the person they took out a term life insurance policy with. 

When a couple gets mutually divorced, their alimony or maintenance, property, and alimony issues are settled according to court decrees. After a couple divorces, the husband can remove his wife from the list of beneficiaries of a regular Term Life Insurance policy. However, one of the primary benefits of purchasing a Term Life Insurance Policy with the Married Women's Property Act is that even after divorce, the wife is still entitled to the coverage amounts.

As stated above, once the Married Women's Property Act has been invoked in a Term Life Insurance Policy, it cannot be amended or changed, securing the woman's finances under any circumstance.

Frequently asked questions

Here are some common questions about the Impact of The Married Women's Property Act on Term Insurance

Is the husband entitled to benefits from Term Life Insurance with Married Women's Property Act? 

No, the husband is not entitled to benefits from Term Life Insurance purchased under the Married Women's Property Act. 

Can a divorced woman claim Term Insurance benefit under the Married Women's Property Act? 

Yes, a divorced woman is still entitled to Term Insurance coverage. The Married Women's Property Act establishes that when the policyholder buys the policy, his wife and children will get the amount, regardless of a change in circumstances - such as divorce. 

If a married man bought a term policy with MWPA and has outstanding loans after he dies, can creditors claim the amount? 

No, creditors cannot claim the amount listed in the term life insurance policy taken under the Married Women's Property Act. Usually, creditors can claim Life Insurance death payouts, but Life Insurance taken with the Married Women's Property Act protects against this from happening. 

Why is Section 6 of the Married Women's Property Act 1923 important? 

Section 6 of the 1923 Married Women's Property Act states that when a married man purchases a Term Life Insurance policy, his wife and children are wholly entitled to it. He cannot claim it at all, and nor can creditors, or relatives.

Who can opt for Term Life Insurance under the Married Women's Property Act? 

A married man, whether he is a widower or a divorcee, or a married woman can purchase a Term Life Insurance Policy under the Married Women's Property Act. 

The following individuals may purchase a Term Life Insurance Policy under the Married Women's Property Act to safeguard against the policyholder's money or property being reclaimed:

• Business owners with accumulated debt

• Employed individuals with outstanding loans

• Individuals in a joint family system and/or Hindu Undivided Family (HUF) 

• Policyholders with irregular sources of income

Who can you name as beneficiaries in Term Life Insurance under the Married Women's Property Act of 1874?

You can name the following individuals as your beneficiaries in Term Life Insurance under the Married Women's Property Act.

• Wife

• Children (biological or adopted)

The husband cannot be a beneficiary of the Term Life Insurance policy. 

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes. 

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Married Women's Property Act on Term Insurance