Loan against insurance policies,
Loan against insurance policies are given only when money banking is pledged.
The loan Can be upto 80-85% against traditional plans with guaranteed return.Therefore all the rights are transferred to the lenders then loan is given to the borrower.
Features of loan against insurance policies
- 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.
Benefits of loan against insurance policies
- 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.
Eligibility criteria for loan against insurance policies
- 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.
Documents required
- ID proof
- Address proof
- Insurance policy document
- Passport size photograph
How to apply for loan against insurance policies
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.
Conclusion:- Insurance policy provides financial security to dependents in case of any unfortunate event. Loan against Insurance Policy should be the last option for a policyholder. It should be availed only for emergency situations. Even if the loan is availed, it should be repaid within 6 months – 1 year so that benefits of the policy can be restored.