Can Loan Be Given Against Insurance Policies?

When you are in urgent need of funds, one of the first things that comes to mind is a personal loan. But did you know that your life insurance policy can also serve as a financial safety net? Instead of surrendering your policy or breaking your investments, you can use it as collateral to secure quick funding. This option, known as a loan against insurance policy, allows you to access liquidity without losing the protection and benefits your policy provides.

Get an instant loan by pledging your ULIP. Apply for a loan against insurance policy today

Can loan be given against insurance policies?

Yes, loans can be given against specific types of life insurance policies. However, not all insurance plans qualify for this benefit. Here are the key points to note:

• Eligible policies: Typically, traditional life insurance plans such as endowment policies and ULIPs are eligible.
• Ineligible policies: Pure term insurance plans do not qualify since they do not have a cash or surrender value.
• Loan type: The loan is secured, meaning your policy acts as collateral.
• Purpose: Funds can be used for various personal or business needs, including emergencies.

Unlock the value of your policy without surrendering it. Apply for a loan against insurance policy now.

Which insurance policies qualify for loans in India

In India, only certain categories of insurance policies are considered for loans:

• Endowment policies: These have a savings component and accumulate a surrender value, making them eligible for loans.
• Unit Linked Insurance Plans (ULIPs): Since these combine investment with insurance, they also carry a cash value that can be pledged.
• Policies with surrender value: Any policy that has built a surrender value over time can be considered for loans.

Need funds quickly? Use your ULIP or endowment policy to secure financing. Learn more here.

Loan eligibility and amount limits (surrender value and cash value)

The amount you can borrow depends on the surrender value of your policy. Generally:

• Lenders offer up to 80% of the surrender value as a loan.
• The higher your policy’s accumulated value, the greater the loan amount you can access.
• Eligibility is also influenced by your policy’s tenure, premium payment history, and existing obligations.

This ensures that both the insurer and the borrower are safeguarded during the repayment period.

How does a loan against insurance policy work?

Here is a step-by-step explanation of how this process typically works:

1. Check policy eligibility – Confirm if your policy has a surrender value.
2. Approach the lender – Financial institutions and insurers offer this facility.
3. Submit an application – Fill out the loan request form with the required details.
4. Assign the policy – The policy is assigned to the lender as collateral.
5. Get loan approval – After valuation, a loan amount (up to 80% of surrender value) is sanctioned.
6. Funds disbursed – Money is credited directly to your account within a short time.
7. Repay the loan – Repay via EMIs or structured repayment plans agreed upon with the lender.

Convert your life cover into quick funds when needed. Check your eligibility today

Interest rates and loan repayment impact

Taking a loan against insurance policy helps you avoid high-interest personal loans. However, non-repayment can reduce the benefits of your policy.

Here are the steps to apply for a loan against insurance policy.

Step 1: Click on the ‘Apply’ button to begin your application.

Step 2: Enter your personal details, including name, PAN, date of birth, and other required information.

Step 3: Provide and verify your email address.

Step 4: Share your insurance policy details to help us prepare your loan offer.

Step 5: We will assess your policy against eligibility criteria and generate a customised loan offer.

Step 6: Complete the KYC process to receive your sanction letter.

Step 7: Register an E-mandate to enable automatic EMI payments.

Step 8: Review the loan agreement, provide consent, and accept the sanction terms.

Step 9: Submit your insurance policy for final loan eligibility assessment.

Step 10: Once verified, the approved loan amount will be transferred directly to your bank account.

Quick processing and easy approval. Apply for a loan against insurance policy online.

Required documents and assignment procedures

Below is the list of documents required to apply for loan against insurance policy.

Assignment procedure:

• The policy is assigned to the lender until loan repayment.
• In case of non-repayment, the lender has the right to recover dues from policy proceeds.

Pros and cons of taking loans against insurance

Below are the pros and cons of taking loan against insurance policy.

Secure funds at lower rates while keeping your policy intact. Apply now.

Precautions, common errors and how to avoid them

When taking a loan against your insurance policy, keep the following points in mind:

• Avoid over-borrowing – Stick to the amount you genuinely need.
• Check interest terms – Compare lenders before applying.
• Timely repayment – Ensure repayment to avoid reducing your policy benefits.
• Understand policy assignment – Remember that your policy is collateral until repayment.
• Track surrender value – Review the surrender value before applying to know your eligibility.

Conclusion

A loan against insurance policy is a smart way to access emergency funds without breaking your long-term financial plans. It offers quick liquidity, lower interest rates than unsecured loans, and ensures that your insurance cover remains intact as long as repayments are made on time. By understanding the process, eligibility, and precautions, you can make the most of this facility while keeping your policy’s benefits secure.

Turn your ULIP policy into instant funds. Apply for a loan against insurance policy today.