Protect Your Life Insurance Policy from Lenders with Married Women Protection (MWP) Act
We live our lives with various assets and liabilities. Though we aim to have more assets than liabilities, things don’t always work out like that in real life. There may be times in one’s life when his liabilities can surpass the worth of his assets. However, that’s not the most troublesome condition one may get into. The thing that may be even more troublesome and threatening is your death in an untimely manner at a time when your liabilities are more than your assets. In such a case, if claims are reimbursed from your property and other assets, your spouse and children may not have anything remaining with them. A terrible imagination, but we all know that such events take place in real world.
Fortunately, there’s something that can protect your loved ones from these unfortunate circumstances. It’s called Married Women Protection Act. This act is basically a legal device that protects your life insurance policy from the claims of lenders in case of any unfortunate incidents and ensures that proceeds from the claim of policy remain only with your partner or children.
There’s one catch though – policies can be covered under MWP only at the time when they’re issued. In other words, existing policies can’t be covered under the act.
Now if you plan to take a life insurance policy covered under MWP, given below are the things that you may want to know:
In order to get your policy covered under this act what you need to do is filing an “Addendum to proposal form for policy under Married Women’s Property Act,1874 (MWP).” In the addendum you’ll have to declare the name of beneficiaries who can claim the policy amount after your death. Keep in mind that only your spouse or children (both adopted and natural) can become a beneficiary – there’s no space for any third-party beneficiary in this act.
Another thing that you’ll have to state in the addendum is name of trustees who’ll be allowed to receive the money on behalf of your spouse or children. Trustee can be anyone – bank, a company that you set up or even any of your beneficiaries (except for minor beneficiaries).
Other important things to keep in mind
Beneficiaries can’t be changed once they’re set – so think well before you set them. However, you can change the trustees at anytime even after the policy has been issued.
Another thing to keep in mind is that no loan can be taken against a policy that’s covered under MWP. The sole purpose of this Act is to protect the claim amount from lenders, which obviously doesn’t justify the requirements of lenders.