Can Loan Be Given Against Insurance Policies?

Hey Pal,

If something were to happen to you, a life insurance policy would protect your family financially. Some insurance products, such as unit-linked and endowment plans, also function as investments. However, you can now use a loan against insurance policy to access cash from your health plan when you need them.

One of the securities you can use as collateral for a loan is a life insurance policy from LIC or another reputable private insurer.

What is the loan against insurance policy interest rate?

While the interest rate on a loan secured by life insurance is determined by the insurance provider, it is typically lower than the interest rate on personal loans. According to historical patterns, interest rates on loans secured by insurance policies might range from 10 to 12 percent.

A loan against an insurance policy can be obtained for as low as Rs 2 lakh and as much as 80% of the surrender value of the policy you are pledging.

Loans are available against a list of accepted insurance policies. These include income plans, whole life plans, endowment plans, unit-linked plans, and policies from numerous insurers. A term insurance policy, however, might not give you access to financing.

Top up A sizable segment of consumers looking for personal finance services are increasingly turning to loans. Customers have been drawn to the loan because of the repayment flexibility provided and the ability to deduct the loan amount from the claim amount, especially those who are struggling financially. Because the requirements for obtaining this type of loan are quite simple to complete, even consumers with low credit ratings find it to be a convenient option.

Once the application is submitted, the loan is often approved within seven days. In addition, if the policyholder passes away while repaying the loan, the dependents won't be the only ones to benefit from the insurance.

The bank or lender has the option of deducting the loan balance and interest from the earnings. It is advised that customers buy term insurance to safeguard their families interests. Online term plans are more affordable options depending on your age, the life insurance provider, and the length of your policy. Additionally, clients are urged to secure loans from their insurers rather than going to banks and pledging their policies as security.

Customers who want to use the entire amount of the loan should speak with their insurer, but if funds are needed sometimes and the loan is seen as a way to increase their liquidity, they might think about speaking with banks that offer overdraft facilities against policies.

I would like to conclude here about a loan against insurance policy. I hope this helps:)

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