Definition
MWP Act Policy
An MWP Act policy is a life insurance policy taken under the Married Women's Property Act, 1874, that ringfences the proceeds for the wife and children, beyond the reach of the policyholder's creditors.
When a married man buys a term or other life policy under Section 6 of the MWP Act, the policy proceeds automatically vest in a trust for the named beneficiaries (wife and/or children). Creditors, courts and even the policyholder cannot attach the money, making it a powerful tool for business owners worried about liabilities.
The MWP endorsement must be made at the time of buying the policy and is irrevocable in respect of the beneficiaries. The policyholder cannot later assign the policy or take a loan against it, and cannot change beneficiaries once set, so the choice needs care.
Related terms
- Assignment of PolicyAssignment is the legal transfer of the rights, title and interest in a life insurance policy from the policyholder to another person or entity.
- NominationNomination is the act of naming a person to receive the policy proceeds on the policyholder's death, without transferring ownership of the policy.
- Term InsuranceTerm insurance is pure life cover that pays your family a large sum if you die during the policy term, in exchange for a low premium.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.