Loan Against SBI Life Insurance Policy – Interest Rates, Eligibility & Step-by-Step Process

Apply for a loan against SBI Life policy and access funds quickly at affordable interest rates. Check eligibility, benefits, and step-by-step process.
APPLY NOW
Get easy loans against your insurance policy!
APPLY NOW
3 mins read
13-March-2026

Unexpected expenses never knock. They just show up. And if you are holding an SBI Life Insurance policy especially something like an endowment plan or a ULIP you might be wondering if there's a way to get immediate liquidity without surrendering your policy. Well, you are on the right track. Let’s walk you through how this works and how you can unlock funds from your life insurance without compromising on your long-term security.

 

What is a loan against SBI life insurance policy? – Meaning and how it works

A loan against an SBI life insurance policy means borrowing money by using your life insurance policy as collateral instead of surrendering it. In simple terms, the loan against SBI life policy refers to accessing funds based on the policy’s surrender value while keeping the insurance cover active.

Under the SBI life policy loan definition, once your policy (such as an endowment or ULIP plan) accumulates a surrender value after a few years of premium payments, you can borrow against life insurance without cancelling the policy. Lenders typically offer around 80–90% of the surrender value as the loan amount. Here is how it works:

  • The policy is pledged to the lender as security.
  • You receive a loan based on the policy’s surrender value.
  • The life cover and maturity benefits continue while the loan is active.
  • If the loan is not repaid, the outstanding amount may be deducted from the policy benefits.

Looking to get the value of your life insurance plan? Apply for a Loan Against Insurance Policy in minutes.

 

How does a loan against your SBI Life Insurance Policy work?

A loan against your SBI Life Insurance policy allows you to access funds by pledging the policy as collateral instead of surrendering it. Once your policy builds a surrender value, lenders can offer a loan based on a percentage of that value while your insurance cover continues.

Here is how the process generally works:

  • Policy builds surrender value
    After paying premiums for a few years (usually 2–3 years), eligible policies such as endowment or ULIP plans accumulate a surrender value. This value determines the loan amount you can access.
  • Policy is pledged as collateral
    To borrow against life insurance, the policy is assigned to the lender as security until the loan is repaid.
  • Loan amount is sanctioned
    Lenders typically provide up to 90% of the policy’s surrender value as the loan amount.
  • Interest is charged on the loan
    Interest is charged only on the amount borrowed, and repayment may be flexible depending on the lender.
  • Policy benefits remain active
    Your insurance cover and maturity benefits continue. However, if the loan is not repaid, the outstanding amount may be deducted from the final policy payout.

What is surrender value?

In life insurance, surrender value refers to the amount a policyholder receives if they decide to exit the policy before maturity. In simple terms, what is surrender value in insurance means the portion of premiums that the insurer returns after the policy has completed the minimum required years (usually 2–3 years). For policies like endowment plans or ULIPs, the surrender value SBI Life determines how much money you can borrow when applying for a loan against the policy. Lenders often use this value to calculate loan eligibility, which is why tools such as an SBI Life surrender value calculator help estimate the amount available for borrowing.

Loan Against Shares
Loan Against Mutual Funds

Eligibility criteria for loan against SBI life policy - Who can apply?

Wondering if your SBI Life policy qualifies for a loan? Here's a general checklist to help:

  • Your policy must have acquired a surrender value this usually happens after 2–3 years of regular premiums.
  • You must be the policyholder and owner of the policy.
  • Premiums must be up to date and the policy must be active.

The exact criteria may vary depending on the insurer and type of policy, but this is the typical baseline.

Still unsure? It’s worth checking your policy documents or connecting with a representative. View eligibility and required documents.
Curious to know if your plan qualifies? Apply now and find out in just a few clicks.

 

Who can give you a loan against SBI Life policy?

If you have an eligible life insurance plan with a surrender value, you can borrow against life insurance from different types of lenders. The policy is used as collateral, and the loan amount is usually a percentage of the policy’s surrender value. Here are the common lenders that provide a loan against SBI Life policy:

  • Banks
    Many public and private sector banks offer loans against life insurance policies. They accept eligible policies as security and provide funds at competitive interest rates.
  • Non-Banking Financial Companies (NBFCs)
    Several NBFCs provide quick loans against insurance policies with faster processing and flexible repayment options.
  • Insurance companies
    In some cases, the insurer itself may allow policyholders to take a loan against their policy once it acquires a surrender value.
  • Loan against securities providers
    Certain financial institutions that offer loans against financial assets may also accept life insurance policies as collateral, depending on eligibility criteria.

Choosing the right lender depends on factors such as interest rate, loan-to-value ratio, processing time, and repayment flexibility.


Types of SBI life policies eligible for loans

Below are the types of insurance policies that are usually accepted as collateral:

  • Endowment policies – Offer a mix of savings and life cover.
  • Money-back policies – Provide payouts at intervals during the term.
  • Whole life policies – Offer lifelong coverage, building surrender value over time.
  • ULIPs (Unit Linked Insurance Plans) – Eligible if they have accumulated enough surrender value.
  • Traditional life insurance policies – With guaranteed returns and maturity benefits.

Each policy type has its own rules on surrender value, so eligibility may depend on tenure, premium payments, and value accrued.

Benefits of taking a loan against SBI life policy

Here’s why this kind of borrowing is a smart move for many:

  • Quick disbursal: Once your policy is verified and assigned, funds are transferred quickly usually faster than traditional loans.
  • No policy surrender: You continue to stay covered while accessing liquidity.
  • Lower interest rates: Interest is usually lower compared to unsecured loans or credit card borrowing.
  • Flexible repayment: Choose between EMIs or interest-only payments.
  • Continued insurance protection: Your life cover stays intact, safeguarding your loved ones.

Think of it as a loan that works with your long-term goals not against them.

Want hassle-free liquidity backed by your policy? See benefits of policy-backed loans. and stay financially secure.

Documents required to avail loan on SBI life policy

To apply for a loan against your SBI life insurance policy, you need to submit a few essential documents for verification. These ensure your eligibility and help in quick loan processing.

  • Duly filled loan application form
  • Original SBI life insurance policy bond
  • Identity proof (PAN, Aadhaar, Passport, etc.)
  • Address proof (Utility bill, Aadhaar, Driving licence)
  • Recent passport-sized photographs

How to apply for loan against SBI life insurance policy?
 

Here’s a step-by-step guide to getting started:

  1. Visit the loan against securities page.
  2. Click “Apply” and enter your full name, email, and mobile number.
  3. Under “Type of security”, choose “Insurance Policy”.
  4. Input your policy’s surrender value and your city of residence.
  5. Agree to the terms and click “Submit”.
  6. Verify your mobile number with the OTP sent to you.
  7. Our team will get in touch to guide you through the final steps, including policy assignment.

Once your details are verified and policy assigned, the funds are disbursed directly to your account. Follow this detailed application guide

Loan amount and interest rates

Your loan amount depends on the value of your policy:

  • Loan amount: Up to 90% of the surrender value of your insurance policy.
  • Interest rate: Varies by policy type and lender can go up to 24% per annum.

Your exact offer is confirmed after a detailed review of your policy’s details. Check current interest rates.

Tip: The higher your surrender value, the larger the loan you may be eligible for.

Repayment terms and conditions

The repayment terms for a loan against SBI Life policy are flexible and can be customised based on your cash flow:

  • Choose EMIs if you prefer a regular and predictable outflow.
  • Go with interest-only payments if you are planning to prepay later.
  • You can also prepay partially or fully at any time without major penalties.

If the loan remains unpaid, the insurer or lender may surrender the policy to recover dues so keep track of repayment timelines.

What happens to your insurance cover?

The good news: taking a loan doesn’t cancel your insurance coverage. As long as you continue to repay the loan interest and principal as per terms, your policy stays active. However, if the policyholder unfortunately passes away while the loan is outstanding, the loan amount (plus any due interest) will be deducted from the death benefit. Your loved ones still receive the net sum assured ensuring continued protection.

Loan against SBI Life policy vs policy surrender: What's best?

When you need funds from your life insurance, two common routes are available taking a loan against your SBI life insurance policy or surrendering the policy altogether. While both unlock liquidity, their long-term impact is very different. Here’s a clear, side-by-side explanation to help you decide.

Loan against SBI Life policy

A loan against an eligible ULIP or endowment policy lets you borrow a portion of the policy’s surrender value while keeping the policy active.

  • Policy stays intact: Your life cover and future benefits continue.
  • Lower interest cost: Interest rates are usually lower than unsecured loans.
  • Flexible repayment: Repay interest or principal as per lender terms; no fixed EMIs in many cases.
  • Tax-efficient continuity: Since the policy isn’t terminated, long-term tax benefits may remain intact (subject to prevailing rules).
  • Liquidity without disruption: Ideal for short-term needs without derailing financial goals.

Policy surrender

Surrendering means closing the policy before maturity and receiving the surrender value.

  • Immediate lump sum: You get a one-time payout.
  • Loss of cover: Life insurance protection ends immediately.
  • Reduced returns: Early surrender often yields less than the total premiums paid.
  • Possible tax impact: Tax benefits claimed earlier may be reversed, depending on policy tenure and rules.
  • No future benefits: Bonuses, loyalty additions, and maturity benefits are forfeited.

Which option works better?

  • Choose a loan: If you need temporary funds and want to preserve insurance protection and long-term returns.
  • Choose surrender: Only if the policy no longer fits your goals and you’re certain you won’t need the cover or future benefits.

In most cases, a loan against an SBI Life ULIP or endowment policy is the smarter choice it provides liquidity while keeping your financial safety net and growth plan intact.

Conclusion

A loan against your eligible life insurance policy like a ULIP or endowment plan gives you access to funds without breaking your long-term plan. With low interest, flexible terms, and uninterrupted insurance benefits, it’s a thoughtful alternative to traditional borrowing.

Ready to explore this smart borrowing option? Apply for a Loan Against Insurance Policy now.

Frequently asked questions

How much loan can I get against my SBI Life insurance policy?
You can typically get a loan amounting to 85% to 90% of the surrender value of your insurance policy. The exact percentage depends on the specific terms of the policy and the issuing insurance company.

What is the interest rate of SBI life?
The interest rate for a loan against an SBI Life policy usually ranges from 9% to 10.5% per annum. The exact rate can vary based on the policy type and current market conditions.

Does the loan amount depend on the type of SBI Life policy I hold?

Yes, the loan amount you can borrow against your SBI Life Insurance policy will depend on the type of policy you hold. Factors like the policy term, premium amount, and surrender value will influence the loan amount.

What happens to the loan if the policyholder passes away before repaying the loan?

If the policyholder passes away before repaying the loan, the outstanding loan amount will be deducted from the death benefit payable to the nominee.

Are there any hidden charges or fees associated with this loan?

There may be associated charges such as interest rates, processing fees, and service taxes. It is important to carefully review the policy documents and loan agreement for details on all applicable fees.

How long does it take to get the loan amount disbursed?

If all documents are in order, the loan amount is typically disbursed within 24 to 48 hours. Timelines may vary slightly depending on the insurer’s internal process and verification requirements.

Do I need to submit physical documents or is the process digital?

Many insurers, offer a digital loan process with minimal paperwork. However, some cases may still require submission of physical documents based on the policy type and internal checks.

Will my insurance policy remain active during the loan?

Yes, your insurance policy remains active as long as you continue paying the premiums. However, any unpaid loan amount, along with interest, will be deducted from the final payout if not cleared during the policy term.

Which types of SBI Life policies are eligible for a loan?

Loans are generally available against traditional life insurance policies like endowment or ULIP plans with a surrender value. Term insurance policies do not qualify, as they lack savings or investment components that build surrender value.

Is loan against SBI Life better than surrendering the policy?

Yes, opting for a loan is usually better than surrendering your policy. While surrendering cancels life cover and reduces benefits, a loan lets you access liquidity while keeping the policy active and safeguarding long-term financial protection.

What documents are needed for a loan against an SBI Life policy?

Typically, you need a duly filled application form, KYC documents, identity and address proof, bank account details, and the original policy document. Additional documents may be requested depending on policy type and loan amount.

What happens if I default on the loan?

If you default, the outstanding loan amount and interest may be adjusted against the policy’s surrender value. Continued non-payment can lead to policy termination, reducing or eliminating maturity and death benefits.

What is the minimum surrender value needed to qualify for a loan?

To qualify for a loan against a life insurance policy, the policy must first acquire a surrender value, usually after paying premiums for at least 2–3 years. Lenders typically offer up to 90% of the surrender value as the eligible loan amount.

Can NRIs take a loan against SBI Life insurance policy?

NRIs are not eligible to take a loan against a life insurance policy, as per the lender’s policies and regulatory guidelines. Many lenders allow NRIs to apply if the policy is valid, has surrender value, and all required documentation is provided.

Does taking a loan affect my ULIP returns?

Taking a loan against a ULIP policy generally does not directly affect the underlying investment performance. However, if the loan and interest remain unpaid for long, the insurer or lender may recover dues from the policy value or benefits.

What is the difference between a policy loan and a policy surrender?

A policy loan allows you to borrow money using your insurance policy as collateral while keeping the policy active. Policy surrender means permanently terminating the policy and receiving the surrender value, which also ends the insurance coverage.

Show More Show Less

Related videos

Bajaj Finserv app for all your financial needs and goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-qualified limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators
  • Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

Do more with the Bajaj Finserv App!

UPI, Wallet, Loans, Investments, Cards, Shopping and more

GET THE APP

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.
For customer support, call Personal Loan IVR: 7757 000 000