Tuesday, 4 November 2014

Story behind Planext

We have been asked many times on why we wanted to take the process of making “Will’s” online and the thought behind the “Fulfillment” process. The truth is while we saw this space as a gap in the entire “Estate Management piece”, the inspiration behind the idea was more tragic and the aftermath more horrific.  The entire idea was born from this incident that left a deep scar in our psyche- and a yawning product gap that Planext wanted to address. This incident we realized was not an insulated incident- but occurred with an unnerving regularity across the country.

I wanted to share the incident with our customers- as a story of the family next door whose life was turned on its head one fatal day. Praveen was the guy that the entire building went to- full of life, always ready to help, Secretary of the building society, a friend, a husband and a father of two lovely young kids. It was the week of Christmas; the buildings were all lit up, the holiday spirit setting in the city, laughter and cheer all around. Praveen was dancing with the kids at home to Christmas carols celebrating the biggest Christian festival. All of a sudden, there was a searing pain, a short drive to the nearby hospital where all the senior doctors were on leave, a few goof ups later- and in a short span of 2 hours- he was no more.

The world came crashing down on the family. A young wife with two young kids- the trauma was immense. Praveen was 40 when he passed, too young to go, a life to look forward too. Too young to have even though of making a “Will”- or was he? As the pain of the loss sunk in, what also hit his wife was the responsibility of 2 young kids and the finances. As most couples Praveen had not discussed his investments and liabilities with his wife. What hit most of his friends who tried to help- was the fact to piece all the information together was the hardest.  What was harder to run around and get the succession certificates, probates etc. The bank accounts were simpler, the housing loan, the car, the mobile- small things that would suck the energy out of anyone. The fact is that bureaucracy exists in India- both in the government as well as the private sector; we needed to face it and handle it.

This was the story that inspired us- if it could happen to Praveen, it could happen to us. We then started to look around to make a will for ourselves- we needed to find a lawyer. The lawyer I found lived halfway across town- and was available only after 5 PM. In Bangalore traffic that was never going to happen! Even if our wives had a will who would run around? Would they have to run around for the money- or look after the kids? Most of us live in nuclear families now in different cities. We live in a connected world, but the running around still needs to be done by someone on the ground- with time on his hand. Eventually for the rest of the world the shock fades, and people move on with their lives- but for the wife, she needs to go on and ensure that her children are protected and taken care of, that all the monies her husband worked hard for are at her disposal and the disposal of her children- and do all the running around- and then tired and dusted at night- mourn the loss of a loved one! 

This was the genesis of our company!

(The author is the founder and Chief Executive Officer at Planext)   

You can get touch with Planext at info@planext.co.in

Sunday, 7 September 2014

Married Women's Property (MWP) Act - Ensure your dependents get insurance policy benefits, not creditors!

We know that life insurance cover is essential to protect ourselves and our family members in case of an unfortunate event. We are even aware that an individual needs to buy adequate term plan if his family members are dependent on him. We also know that we need medical insurance as it protects us and our family financially in the event of an unexpected serious illness or injury that could be very expensive.

But many of us are not familiar with Married Women’s Property Act (MWPA). For instance: 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 their 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. Let’s try to understand the benefits which our family members would get when a life insurance policy is effected under the MWP Act.
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 does not have to spend any additional money for the purpose.

Married Women's Property Act (MWPA)
Married Women's Property Act 1874 (MWP Act) was created to protect the properties owned by women from relatives, creditors and even from their own husbands. The Section 6 of the MWP Act covers life insurance plans. Any married man can take a life insurance policy under MWP Act. This includes divorced persons and widowers.
The policy can be taken only on one’s own name, i.e., the life assured has to be the proposer himself. Any type of plan can be endorsed to be covered under MWP Act.

The beneficiaries can be:
  • The wife alone
  • The child/ children alone (both natural and adopted)
  • Wife and children together or any of them
The policy can also be a named policy meaning the name of the wife and the child/children are mentioned in the plan or as a class by not mentioning the names. However, Mohammedan proposers can only take up named policies. The benefits of the policy proceeds can be mentioned as specific percentages to each beneficiary or as equal amounts.

How will the beneficiaries get the benefits?
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, or a third person.
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 plan cannot be surrendered or be assigned for taking a loan by the proposer.
Also 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.
The policy is particularly helpful for the families of businesspersons who have highly leveraged businesses (businesses with a high component of loans). 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 (those who have provided loans in the form of money or material) have the right to sell all the assets of the owners and their families like land & buildings, jewels, cars, artistic collections, savings in life insurance, mutual funds, bank deposits, etc 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 plan 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.

Why are people not making use of the MWP Act?

There is lack of awareness. Not many people, even in the insurance industry, are aware of the provisions of the MWP Act. Once covered under MWP Act, the proposers lose control to change or make alterations in the plan.

1. http://articles.economictimes.indiatimes.com/
2. www. flame.org.in