The Married Women’s Property Act, 1874 protects the property of a wife if the proceeds of her husband’s life insurance policy is attached to pay for outstanding loans in the event of his death or bankruptcy.

Types of policies
Life insurance policies of any kind, term insurance, endowment policy or unit linked pension plans can be bought with a MWP addendum to take benefit of the said legislation.

Conditions
The policy can be bought only by a married man who is an Indian citizen. The beneficiaries of the policy must be his wife and/or children. Even a divorcee or a widower can buy an insurance policy with an MWP addendum. A married woman can also buy such a policy with her children as beneficiaries.

Process
While applying for the insurance policy, the proposer must fill up a MWP addendum. All details in the form must be filled and signed by the proposer in presence of a witness. Beneficiary details must be provided in the form, with an option to assign specific percentage share to each beneficiary (wife and/or children). Beneficiary details cannot be changed later.

There is also a provision to appoint a trustee in the MWP addendum. The trustee receives policy proceeds and can utilise them for the benefit of the beneficiaries. Thus, there is no need to create a trust for the benefit of the wife and children under the Indian Trusts Act.

Surrender of policy
In case a cash value policy is surrendered, the proceeds will go to the beneficiaries. If the policyholder survives the term, the maturity proceeds would still go to beneficiaries. On death of the policyholder, proceeds will go to listed beneficiaries. It cannot be attached as property of deceased policyholder.

Point to note
Policy with the MWP addendum can be made in favour of married women of all religions.