Insurance policy under MWPA- Imp Points to consider for layman

·        This is important to note that if you are taking insurance policy making your children a beneficiary and then again taking policy on your children's name who is already a beneficiary but not a participant in business or an earning member with income at the time of policy being bought and doesn’t have significant income, it will be considered as diversion of funds with an intention to defraud creditors. if your children doesn’t have the income to protect, any policy bought by him under MWPA will not hold good under the statute thus liable to be attached by creditor or law enforcement agencies.

·        Basic tenet of the MWP act is that  it was created to protect the properties owned by women from relatives, creditors and even from their own husbands, in the spirit of the law, if husband and wife are the people involved in the business and majority of the income and properties are owned by them from their income, entire liability becomes theirs in case of any lawsuit in future…..thus a policy under MWPA will hold good only when its taken for the wife or wife takes it for herself.

similarly any policy assigned under MWPA for daughter in law isnt admissible since the proposer doesn't have income to protect , amounting to diversion of funds with a view to defraud law enforcement agencies and creditors.

    Sole purpose of buying insurance under MWPA is to protect the income and secure the future of  wife and children, if such a proposal is left for the law to decide on its fate or should any govt institution should contest the same in future at the time of maturity or surrender, its very purpose will be defeated.

(Author has 20 yrs of experience in Estate planning and these views are his personal views as interpreted from law applicable)