Purpose of Loan Against Insurance Policy

Insurance policy is normally taken to protect your family in case something happens to you. Now with the option of a loan that can be taken on this policy, it helps in meeting short term financial requirements or an emergency. One can get this loan on the basis of listed policies by each bank. Most loans are offered on unit-linked plans and endowment plans. It is one of the most convenient ways to raise funds when in need as it does not require any additional collateral by way of assets.

Features of Loan Against Insurance Policy

Loan against insurance policy is a popular concept abroad. In India, while it is available as a product in the market, most people are not aware of this option. The number of people who take insurance can be significantly higher in the country as compared to other countries. Some of the main features of this loan are :

• The rate of interest is quite competitive on this type of loan and is normally lesser than the regular personal loans.
• The repayment options are quite flexible.
• Depending on the amount of insurance, one can avail principal loan amount of a high value.
• The eligibility criteria are relaxed by most lenders as there is an insurance policy already in place.
• Some lenders offer the option of applying online for this type of loan making it even more convenient.
• Minimal documentation is required to get this loan.
• A nominal loan processing fee is levied on this type of loan.

Eligibility Criteria for Loan Against Insurance Policy

Loan against insurance policy has relatively relaxed eligibility criteria as compared to other regular loans.

• Minimum age of 21 years
• Salaried or self-employed with an insurance policy
• Resident of India
• Some banks specify a minimum amount of insurance policy to be taken
• Must have a regular source of income

Benefits of Loan Against Insurance Policy

• Additional collateral/asset is not required as the insurance policy itself acts as a guarantee.
• Interest rate on this type of loan is normally lesser than a personal loan.
• Since the loan is secured in the first place itself with the insurance policy, there are very less chances of loan application rejection.
• Even if the policy holder passes away during the tenure of the loan, the remaining balance of loan repayment amount is deducted from the policy amount and the balance is given to the nominee.
• Loan against insurance policy can be applied online as well making the whole process hassle-free and quick.

How to Apply for a Loan Against Insurance Policy

Walk into any bank branch and one can consult a representative directly to understand more about the loan product. This is one of the best ways to get information and submit your application as one can receive personal consultation. Many queries can be clarified through personal interaction with a bank.

Alternatively, one can apply online for this loan. This is definitely a quicker and easier way to avail this loan. Some lenders also allow for document submission online and approvals as well. An online tracking system helps you understand the status of your loan application. Customer contact centres of most banks provide round the clock service and can be approached to get details on this loan.

To apply for this loan, one needs to provide only basic documentation to most lenders.

• ID proof
• Address proof
• Insurance policy document
• Passport size photograph

Top Lenders Offering Loan Against Insurance Policy

Some of the top lenders in the country who offer this type of loan are:

FAQs: Loan Against Insurance Policy