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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Life Insurance Products

Under the Married Women's Property Act (MWPA) 1874 as applied to life insurance, what is the key benefit of a policy taken under Section 6 for the wife and children?

A policy under the Married Women's Property Act creates a trust for the wife and children, so the proceeds are generally protected from the husband's creditors. The husband cannot freely assign or surrender it, which secures the family's benefit.

  1. AThe policy proceeds become fully taxable in the hands of the wife
  2. BThe policy proceeds are protected from the husband's creditors and form a trust for the wife and childrenCorrect
  3. CThe policy can be freely assigned by the husband at any time
  4. DThe policy proceeds are paid only after the husband's retirement

Explanation

A policy under MWPA creates a trust in favour of the wife and/or children. The proceeds are generally protected from the claims of the husband's creditors, and the husband cannot assign or surrender it freely. It does not make proceeds taxable.

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