Why the Married Women's Property Act is an underused financial safeguard
One such tool is the Married Women's Property Act (MWPA), 1874, an over 150-year-old law that remains one of the most underused financial safeguards in India.
What is MWPA and why should women care?
The MWPA allows a married man to take a life insurance policy and designate the proceeds solely to his wife and/or children. Once invoked, the policy becomes a legally binding trust, shielded from creditors, extended family claims and legal disputes. This means that in case of the husband's demise, the payout directly and exclusively reaches the identified beneficiaries without delays or probate.
Say, your husband has taken business or other loans. He has also bought a term insurance policy to secure your children's higher education. If he passes away without paying up his loans, creditors will come after the term insurance payout, which is meant to secure your children's future. However, if the policy is endorsed under MWPA, the creditors cannot touch the insurance payout. The entire proceeds go only to his wife and children, giving them financial security.
Despite its simplicity and strength, MWPA is often overlooked. According to various estimates, less than 10% of life insurance policies are assigned under MWPA mainly due to lack of awareness.
The MWPA offers incontestable legal certainty in life insurance payouts. Once executed, it cannot be revoked or changed, making it one of the strongest instruments of protection available.
Most women assume that nominations or wills are enough, but they're not foolproof. A nomination assigns an asset to someone but doesn't ensure legal ownership. A will directs wealth distribution after death but may face delays or disputes. MWPA offers direct, exclusive ownership (applies only to life insurance policies).
Who can opt for MWPA?
Only married men (or those about to get married) can assign a life policy under MWPA. That said, informed women play a key role in ensuring it is done. Whether you're salaried, self-employed or a homemaker, this is a critical step in safeguarding your family's financial future.
MWPA empowers women in several ways. It creates legal ownership – the policy proceeds belong only to the wife/children, not the husband's estate. It bypasses legal hurdles as there is no scope of probate or delays, and the funds go directly to beneficiaries. It also shields from liabilities as creditors cannot access the policy amount.
Asset planning tips
MWPA cannot be added to an insurance policy later – it has to be declared at the time of buying the policy. If your spouse is buying a new life insurance policy, request it be assigned under MWPA. It takes one additional form but ensures that money comes directly to you in case of an unfortunate event.
If you're financially independent, you must have estate planning of your own. Consider buying life insurance yourself and structuring a will to ensure smooth distribution of proceeds. Additionally, for working women or those with assets of their own, setting up a personal will is crucial. It's an act of responsibility not just for yourself, but for those you care about.
A quick financial protection checklist can help married women secure their future with confidence. First, confirm whether your spouse's life insurance policy is covered under MWPA, ensuring direct benefits for you and your children.
Understand the crucial difference between nomination and actual ownership of assets. Keep all financial documents updated and organized for easy access. Draft or review your personal will to clearly define asset distribution.
Consider setting up a separate account to receive future proceeds securely. Lastly, participate actively in household financial decisions to stay informed, empowered and prepared for unforeseen circumstances.
Final thoughts
Empowerment is not just about earning or access, it's about protection. MWPA might seem like a technical detail or a forgotten checkbox, but it could be the most important step in securing your financial independence.
In an era where only 30-40% of women in India have joint or sole ownership of household assets compared to almost 80% of men, this gap in legal protection is too big to ignore. And in many cases, a life insurance policy might be the only source of immediate liquidity for a woman after the loss of a spouse.
So, ask the questions. Know your rights. MWPA isn't just a law, it's a legacy safeguard. And in your journey toward financial freedom, understanding it could make all the difference.
Manju Dhake, Head – Insurance Advisory Practice, 1 Finance
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