Many people in India prefer buying a term insurance policy over other life insurance policies mainly because it is a pure protection policy that has an affordable premium. While some people invest in term insurance mainly to get tax benefits, others invest in a term plan to secure the financial future of their family.
While buying a term insurance policy, you would want to ensure that your family members, i.e., spouse and children get the benefit in your absence. You would want them to get the claim amount without any hassles, right? But, what if you have any outstanding dues, like a home loan, or a personal loan. In such a case, the creditors may have a prior claim to the money before it reaches the nominee (spouse and children).
Thus, simply buying a term plan will not ensure the financial protection of your family; they may not get the sum assured after your demise. So, if you are a married person, it is advisable that you buy a term insurance policy under the Married Women’s Property Act, 1874 to ensure that the sum assured is passed onto your wife or children.
When you buy term plan under the MWP Act, then the family interest becomes paramount and only your wife and children become entitled to claim the death benefit in the event of your unfortunate demise during the policy period. However, one of the important things to know about this kind of policy is that it cannot work in reverse. This means, a woman cannot make her husband the policy beneficiary and avail the benefit of the act. However, a woman can buy a term plan under MPW act and appoint her children as the beneficiary so that they are assured of getting the death benefit proceeds.
Buying a policy under the Married Woman’s Protection Act simply implies that you protect your family’s interest and give them the much-needed financial protection they deserve. Since the Act ensure the insurance amount reaches your wife/children, they will can be financially independent even in your absence and manage the debts efficiently that you owe.
While buying a term insurance plan under MWP act is beneficial for all, it is particularly a better choice for salaried individuals. Many people rely on getting a loan such as home loan, business loan or personal loan, to meet their goals and immediate financial needs. For instance, you may take a business loan to buy a new machinery. And, if you have availed any type of loan, it is critical that you buy a term plan. In case of any unfortunate event, the policy benefits will be helpful for the family to meet their regular expenses before the creditors claim their right to the amount.
An important aspect of buying a term plan under MWP Act is that you must execute at the time of buying the policy. This is vital because, once you complete the purchase, you cannot modify the plan under the MWP act. So be careful while buying the policy and mention clearly in your application form that you want to buy term insurance under MWP act.