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22 Sep, 2020 | Term Life Insurance

MWP act can ensure smooth term insurance claim settlement

Mahavir Chopra
By Mahavir Chopra
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Will your wife get the term insurance claim first, or your creditors?

This is a very pertinent and relevant question, that is very easy to miss when you’re going through with your term insurance purchase. The whole purpose of buying a term insurance policy is so that your family has sufficient funds to fulfill their dreams and ambitions, even if you happen to die early.

But, did you know that your creditors always have the first right to this claim money, even before your own wife or kids? According to the law, anyone that you owe money to will first be paid off before the claim amount reaches your family’s account.

This would include -

  • Any banks that you owe loans to
  • Any individuals that you have taken loans from
  • Any personal or business loans that you have signed as a guarantor for

Further, in the absence of a will, other family members might declare a claim to your policy as your ‘legal heirs’.

But, you can protect your family’s interests - specifically if you’re married (and male), and are taking the policy with the sole purpose of safeguarding your wife and children’s financial independence.

What should you do?

At the time of taking the policy, opt for the Married Women’s Property Act. It just requires an extra addendum that you sign, and attach to your proposal form.

How does this Act help?

A term insurance policy taken under the Married Women’s Property Act ensures that your claim amount directly reaches your wife, insulating it from any loans or liabilities that you owe. This is a sureshot way to see to it that your wife and children stay covered, despite any loans that you have taken out.

This also ensures that no one else - such as other family members in a joint family, can claim this amount, as legal heirs.

What else should you remember?

  • The MWP addendum can only be signed at the time of taking the policy - and never afterwards.
  • Once the MWP is added to the policy it cannot be changed or removed by anyone - not even the policy holder himself. The MWP addendum stands valid even in the case of a divorce.

Further, you must not miss appointing a nominee for each policy that you take. A nominee, who is the custodian of your policy will be responsible for disbursing this amount appropriately as per your will or the legal heir certificate. In fact, we would say that you should add more than one nominee for every policy.

Knowing about the Married Women’s Property Act can be the difference between a comfortable future for your family, or not. And small things like this make a huge difference in a term insurance policy.

For a deep-dive into all things term insurance, and make sure that you are meticulous at every step of the way - get our eBook - The Ridiculously Simple Guide To Term Insurance.

If you have any further questions about any type of insurance, you can post them on our forum.

Mahavir Chopra
Written by,
Mahavir Chopra, Founder,

Mahavir is the Founder at Since 2005, Mahavir has been building tech-based startups that compare and advise insurance products to individual buyers. In his last role, he was the Chief Business Officer at Coverfox. Mahavir is a recognized professional in the personal insurance field. He has contributed to leading business publications, including The Economic Times, Business Standard, Mint, DNA, and Moneycontrol

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