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The concept of life insurance was initially introduced to offer lifelong financial security to the applicant. It is an assurance to the policyholder of guaranteed returns upon policy maturity or in the event of death of the insured during the term of the plan. However, as time progressed, life insurance policies are now being increasingly used by the policyholders to also avail loan facilities during a financial crunch. This blog explores the possibility of availing a loan against life insurance policy for the insured.
When you need a huge sum of money to purchase something specific (such as property or material goods like a vehicle), one generally looks up to the option of taking a loan from a money-lender (such as a bank or any other financial institution). However, it may not always be necessary to rely on unsecured loans as the only option to meet financial obligations.
Life insurance now guarantees its policyholders an alternate loan-availing facility against their purchased insurance plans. This only means guaranteed financial security for the policyholder and his/her loved ones in the future as well as a means to depend upon for money as and when required.
Let’s look at some of the top advantages of availing loan against your life insurance policy:
We looked at the various benefits in availing a loan against your life insurance policy during difficult times versus seeking one from a bank or financial institution. Now let us look at the different steps involved in this process:
If you’re considering taking loan against life insurance, it’s worth knowing the rate of interest for the loan at some of the leading banks and financial institutions:
|Name of the Insurer/Bank/Lender
|Rate of Interest Offered on the Loan Amount Granted
|LIC Housing Finance
|14.80% and above
|13% and above
|Kotak Mahindra Bank
|10.75% and above
|10.25% and above per annum
Wrapping it Up
This blog detailed the exact procedure for applying for a loan against life insurance policy. It also stated the rate of interest offered by different insurers for your better understanding. Know that it is always wiser to avail a loan against your existing life insurance policy rather than seeking one from a bank/any other financial institution. For more information on getting a loan against life insurance or for details on various life insurance plans as per your requirement, visit PayBima online.
Popular Life Insurance Companies
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Some insurers encourage their policyholders to avail the loan facility against the purchased life insurance plan from the insurance company. The policyholder needs to submit a loan application form and assign the original life insurance policy document to the insurer at the time of availing the loan. A minimum of Rs. 5 lakh to Rs. 5 crore can be granted as loan against life insurance policies. However, it is always better to check with your insurer about the specific loan amount or term of loan granted. Your insurer would generally allow you to avail loan facility against life insurance when there is a sufficient cash value build-up in the policy to facilitate taking loan in the specific amount required.
FAQs on Loan Against Life Insurance Policy
Can you take a loan against life insurance policy?
What is the minimum amount in loan against insurance policies?
How soon can I borrow against my life insurance?
Some insurers encourage their policyholders to avail the loan facility against the purchased life insurance plan from the insurance company. The policyholder needs to submit a loan application form and assign the original life insurance policy document to the insurer at the time of availing the loan.
A minimum of Rs. 5 lakh to Rs. 5 crore can be granted as loan against life insurance policies. However, it is always better to check with your insurer about the specific loan amount or term of loan granted.
Your insurer would generally allow you to avail loan facility against life insurance when there is a sufficient cash value build-up in the policy to facilitate taking loan in the specific amount required.
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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