Applicable fees and charges
The following charges are applicable on loan against life insurance policies:
|Types of fees
|Up to 20% per annum
In case of lock-in policies, compounding interest will be charged
In case of lock-in free policies, simple interest will be charged
|Up to 36% per annum (inclusive of applicable taxes) of the loan amount or
Up to Rs. 10,000 (inclusive of applicable taxes)
|Full prepayment - Up to 4.72% (inclusive of applicable taxes) on the outstanding loan amount as on the date of full prepayment
Part-prepayment - Up to 4.72% (inclusive of applicable taxes) of the principal amount of loan prepaid on the date of such part prepayment
|In case of default of repayment instrument, Rs. 1,200/- per bounce will be levied.
|Delay in payment of monthly instalment shall attract penal interest up to 42% per annum applicable on the monthly instalment outstanding, from the respective due date until the date of receipt.
|Mandate rejection charges
|Rs. 450/- per month from the first month of due date for mandate rejected by customer’s bank until the new mandate is registered.
|Payable as per state laws
|Annual maintenance charges
|Up to Rs. 2,949/- (inclusive of applicable taxes) if the loan tenure is above 12 months
|Up to Rs. 2,950/- (inclusive of applicable taxes) to be collected on renewal
|Broken period interest/ pre-monthly instalment interest
|Broken period/ pre-monthly instalment interest shall mean the amount of interest on loan for the number of day/s which is/are:
Scenario 1: Over and above the period of 30 days from the date of disbursement of the loan
Method of recovery of broken period interest/ pre-monthly instalment interest:
Added to the first instalment amount
Scenario 2: Less than period of 30 days from the date of disbursement of the loan, interest on first instalment will be charged for actual number of days
Frequently asked questions
If you need some financial help and looking for availing a loan, you can get a loan against your insurance policy. In this case, your insurance policy acts as the collateral against the loan amount.
The eligibility criteria for taking a loan against your insurance policy is relaxed compared to other types of loan. It depends on the type of insurance policy you own and whether it is approved for loan by the lender. Loan against Insurance Policy is given only against Unit-linked plans (ULIPs).
A processing fee up to 36% per annum (inclusive of applicable taxes) of the loan amount or up to Rs. 10,000 (inclusive of applicable taxes).
1. If the policy is in a lock-in period, a bullet interest payment will be made on completion of the policy lock-in period. A bullet repayment is a lump sum payment made for the entirety of an outstanding dues under the loan amount at maturity.
2. If the policy is out of the lock-in period, the interest is calculated and payable monthly.
In case of lock-in policies, compounding interest is to be charged.
In case of lock-in free policies, simple interest to be charged.
It takes approximately 24 hours to process a loan against an insurance policy. This is subject to the submission of all required documents.
You need to present the following documents to avail of a loan against an insurance policy:
- One copy of your recent photograph
- PAN card
- Aadhaar card/ passport/ voter’s ID for address proof
- Valid insurance policy document
- Bank proof, such as bank account statement or cheque copy
No, you cannot convert the principal amount to EMIs.
Yes, there is an option for partial withdrawal during the subsistence of the loan. However, it is strictly subject to successful verification by the lender. Bajaj Finance holds the right to deny partial withdrawal requests at its sole discretion.
Yes, a policyholder with multiple ULIP policies can avail loan against all policies in one go. This is subject to the assignment of all the policies in favour of Bajaj Finance.
The policy has to be assigned in favour of Bajaj Finance Limited.
You can call the customer centre at 1800-123-2557 or write to us at Laip.email@example.com for any loan against insurance policy-related service requests.
All loans are processed by Bajaj Finance Limited.
In case the loan is availed, the policy will be assigned in favour of Bajaj Finance. There are two ways of closing the loan –
- You can repay the total outstanding in Bajaj Finance Limited designated bank account. Post receipt of payment, loan account shall be closed, and the policy will be assigned back to you.
- You can repay is repaying via surrendering the policy. Basis your request, the insurance company will surrender the policy and the surrender value will be transferred to Bajaj Finance Ltd., since the policy is assigned to them. Bajaj Finance will adjust s the loan amount and refund the surplus (if any) to the you and close the loan account.
Policy surrender will be at the discretion of the lender only.
Any intimation regarding premium payments is sent directly to the client by the insurance company.
The interest rate for a loan against an insurance policy depends on several factors, including the policy type, surrender value, loan amount, credit score, and so on. These factors may vary from one lender to another. It is essential to take into account these factors before making a decision.
Financial institutions determine the applicable interest rate on these loans by taking into consideration the premiums paid by borrowers till date. Borrowers who have paid more premiums towards their insurance plan can get the loan at a lower rate compared to customers who have paid a lesser number of premiums. Generally, the interest rate on this type of loan ranges between 10-15% p.a.