Avoid riders along with term insurance policies.

Most of the insurance companies are offering many riders along with the policy by charging extra premium. A rider is an additional benefit other than the death benefit. Some common riders are Accidental death Benefit, Increasing death cover, Waiver of premium in certain events, payment of claim in installments etc. It is better to avoid such riders. Instead of these riders, you can purchase a standalone Personal Accident Policy and Critical illness Policy which offers more broad cover at reasonable cost.

If they are offering premium waiver rider in tem policy in case of disability due to accident & critical illnesses, you can opt for it because it is very useful & cost effective.

Ensure Prompt Nomination & Let the nominee know about the policy.

While purchasing the policy, ensure that you are nominating your legal heir as the nominee. If you are purchasing the policy before marriage and nominate parents as nominee, it is better to change the nomination in favor of your spouse after marriage. Remember, you can change nomination anytime and the nominee has a role to play only in case of your death.

After purchasing this policy, verify the policy document for correctness in all aspects and inform the nominee, where the policy certificate is kept. If you are getting the policy credited to the e-insurance account, get a copy of the policy printed and kept for easy reference for the nominee. Also inform the nominee the contact number of the life insurance company to be used in case of any claim. Most of the companies are having a documented process for claim settlement in their website. You can take a print of that and kept it along with the policy for easy reference of the nominee.

Married Women’s Property Act (MWPA)

We know that life insurance cover is essential to protect our family in case of an unfortunate event. But many of us are not familiar with Married Women’s Property Act (MWPA). If you are a businessman and have accumulated debts, your creditors will have the first claim on your policy proceeds. To protect your family against such crisis, you need bring the policy under the scope of the Married Women’s Property (MWP) Act. This ensures that on the death of the life assured, the dependents receive the proceeds, not the creditors.

Both businessman and salaried employees should use this option. To cover your life insurance policy under MWP Act is very simple and inexpensive process. Every policyholder can adopt this route to protect his family and it is free.

The Section 6 of the MWP Act covers life insurance plans. Any married man can take a life insurance policy under MWP Act.

Each policy will be considered as a separate trust. At the time of the proposal, the proposer is expected to mention the trustees too. The trustees can be the wife and or one or more of his adult children.

The policies are considered as an automatic trust and there is no need to create a Trust under the Trust Act. The policy holder has the option to change the trustees at any point in time. However, the beneficiaries of the plan once declared cannot be changed at any time by the proposer. The main advantage for the beneficiaries is that the policy cannot be surrendered or be assigned for taking a loan by the proposer.

In case of a death claim, the policy proceeds are received by the trust and cannot be claimed by the debtors nor will it form part of the estate of the proposer. Hence, the welfare the wife/child/children are protected with utmost care.

This option is particularly helpful for the families of businesspersons who have highly leveraged businesses. In proprietorship and partnership concerns in case of a loss, the owner/s of the firms have unlimited liability. This means in case of winding up of the business or in case of a loss, the creditors have the right to sell all the assets of the owners including life insurance to recover their money.

However, the creditors cannot access the life insurance policy covered under MWP Act. Thus, the policy creates an immediate asset for the dependent family members, which they can enjoy for sure.

How to get a policy covered under the MWP Act?

At the time of making the application, a separate from has to be filled by the proposer for it to be covered under MWP Act. The form will seek details of the beneficiaries, the share of the benefits that are to be accrued to them and the trustees. But you cannot do it now in your existing policies.
Once covered under MWP Act, the proposer loses control to change or make alterations in the plan.