Loan Against SBI Life Insurance Policy

Apply for a loan against SBI Life policy and access funds quickly at affordable interest rates. Check eligibility, benefits, and step-by-step process.
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3 mins read
30-December-2025

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 policy?

A loan against a life insurance policy such as an SBI Life ULIP or endowment plan lets you borrow money by pledging your policy as collateral. Since policies like these build a surrender value over time, you can use that value to get a loan while still continuing to enjoy the life cover and maturity benefits.

Did you know? Many policyholders are unaware that they can use their life insurance as a financial asset just like gold or mutual funds.

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?

Here’s the simple idea: once your SBI Life plan like an endowment, money-back, or ULIP policy builds up a surrender value, you can use that value to secure a loan. Instead of surrendering your policy during a cash crunch, you get to borrow against it. The lender typically offers a percentage often up to 90% of your policy's surrender value as a loan.

The best part? You don’t lose your life insurance coverage. Your policy continues as is, even as you meet your immediate financial needs.

Repayments are flexible too. You can go with standard EMIs or even opt for interest-only payments if you prefer lighter instalments.

Loan Against Shares
Loan Against Mutual Funds

Eligibility criteria for SBI life policy loan

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.

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 from my 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.

Can I take multiple loans against the same SBI Life Insurance policy?

Yes, you can typically take multiple loans against the same SBI Life Insurance policy, subject to the policy terms and conditions and the available surrender value. However, there may be restrictions on the total loan amount or the number of loans you can take.

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.

How soon can I get approval for the loan?

If all documents are in order, approval for a loan against SBI Life policies is usually quick, often within a few working days. The actual timeline depends on policy type, surrender value, and internal verification processes.

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.

Can I apply for a loan against SBI Life policy without surrendering?

Yes. You can avail a loan against eligible ULIP or endowment policies from SBI Life Insurance without surrendering them. The policy remains active, allowing you to access funds while retaining life cover and future benefits.

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.

Is my SBI Life policy coverage affected if I take a loan?

No, the policy coverage usually continues as long as the loan and interest are serviced. However, if the outstanding loan plus interest exceeds the surrender value, it may impact benefits or cause policy termination.

How long does loan approval take?

Loan approval is generally quick, often within a few working days after document submission and verification. Digital processes and complete paperwork can further speed up approval and disbursal timelines.

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.

Can I take multiple loans against the same policy?

Usually, multiple loans are not allowed simultaneously. However, you may be able to top up or reborrow if the policy’s surrender value increases and existing loan dues are within permissible limits set by the lender.

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