The purpose of buying term insurance, generally, is to secure your wife and children’s future in case of any uncertainty. It would also be good if the term plan provided the claim amount hassle-free in your absence. But, there is a condition that usually applies in such cases, like if you owe the creditors, relatives or friends any outstanding loan, they will have the claim to the amount first. In such a situation, buying term insurance under the MWP act comes into the picture. Before proceeding to the importance of buying term insurance under the MWP Act, let us first know what MWP Act is.
The MWP Act
The Married Women’s Property (MWP) Act is a law that was created for the protection of women’s properties against creditors, relatives, or friends trying to claim them with unfair means. As per Section 6 of the MWP act, in case a married man purchases an MWP act life insurance, then only his wife and children can claim the policy benefit. As a result, the death benefit will not be passed to the creditors, relatives or friends who have outstanding loans.
Importance of MWP in Insurance
Now, let us understand the importance of MWP in insurance with the help of the following points:
- Paid-up value of policies
If you opt for a cash-value life insurance policy, the premiums are paid after the first few years as mentioned in the policy, and the policy possesses a “paid-up value”. It means that the policy doesn’t completely lapse or become zero if the policyholder doesn’t pay the premium.
- Surrender Value
If the policyholder chooses to surrender the cash value in any case, the beneficiaries will be paid the surrender value as defined in the policy under the MWP Act. Thus, in case a married man takes a life insurance policy under the MWP Act, whether the situation is survival, death, surrender or paid-up policy, the beneficiaries named in the policy will be receiving all the benefits.
- Affordable Premium
The most important benefit of term insurance is the affordable premium. If you compare a term insurance plan with other life insurance plans, you will find it to be easily affordable. Additionally, the earlier you buy, the lower will be the premium. Moreover, buying a term plan online will cost you less than an offline term plan. For example, if you opt for the Tata AIA term plan online, you will find the cost more affordable.
- Death Payout Options
Another importance of buying a term plan is that you get multiple death benefit payout options. For example, the financial liability for paying the EMI of your home or car might fall on your wife or children. Tata AIA term plan also provides various payout options. Hence, in case of an untimely death, the family’s future financial needs will be met. Most significant expenses can be met with the amount received.
- Additional Riders
Generally, term plans cover a sufficient amount of financial needs. But, there are a few emergencies that can be taken care of by opting for additional rider benefits. The emergencies that are usually covered are accidental death, critical illnesses, hospitalisation expenses, disability, etc. Only an additional premium is required to be paid for tackling such emergencies. For example, the Tata AIA life term plan provides a comprehensive additional rider plan.
Key Takeaways
The terms, features and benefits of a term insurance policy, whether under the MWP Act or not, are one and the same. Besides, the advantage of the MWP act in insurance is that if the husband is the sole earner of the family, then the amount of the policy will go directly to the wife and children. It acts as a protection against the repayment of outstanding loans after the policyholder’s death and safeguards the wife’s and children’s financial future.
