You can also obtain a loan on insurance policy; find out more about the unique circumstances surrounding it here.
Apply for a loan, only if you are in need of funds. Because whatever the loan is, if you do not pay on time then you may have to face troubles. Therefore, before taking a loan, understand your needs thoroughly. I was taken policy loan on our 3 LIC insurance policies, due to non deposit of interest, one policy was lapsed. They provide you time to deposit interests and restart the policy.
You may borrow money against a life insurance policy if you have one. Loans secured by the insurance are freely accessible and have low interest rates. These loans are available from both banks and non-banking financial organisations (NBFCs). Today, we’re informing you about it.
The loan amount depends on the type of policy and its surrender value.
Loan amount on surrender value:
When surrendering a life insurance policy before the whole term has expired, you receive a portion of the premiums paid back. In this, the fees are deducted. The surrender value is this sum.
Loan amount can be 80-90% of the surrender value of the policy.
Surrender Value on Life Insurance Policy:
Only in those policies where both the insurance and the investment are included, the surrender value is given back. Therefore, a pure term plan won’t have a surrender value. Traditional plans, such as endowment, moneyback, and ULIP, have a surrender value, however. In addition, you won’t receive a portion of your money until you’ve made premium payments continually for two years. This restriction is frequently 3 years.
Interest amount against loan on insurance policy:
The amount and quantity of premium payments affect the interest rate. The interest rate decreases as the premium and premium quantity increase. Interest rates on loans secured by life insurance range from 10 to 12%.
Apart from the interest, the premium amount will also have to be paid on the loan taken against the policy. If you not paid the loan interest and premium amount then your policy will be lapsed.
Also read How to make ABHA Card
Documentation for loan on insurance policy:
Along with the application form for loan against life insurance policy, you need to submit all the required original documents of the life insurance policy. A cancellation check has to be attached with the application form to avail the loan amount. Signing a contract is mandatory for taking a loan against an insurance policy. This all documentation process will be done at insurance company office.
Visit the insurance companies office for more details. Also search online on there website.