Loan Against Life Insurance Policy

People can get a loan depending on their insurance amount with the aid of a loan against an insurance policy. This kind of loan is simple to approve and needs minimal paperwork.

Features of Loans against Insurance Policies

The idea of loans against insurance policies is well-liked worldwide. Even if it is a product on the market in India, the majority of people are not aware of this choice.

This form of loan has a very competitive interest rate, which is typically lower than the rate on traditional personal loans.
There are several flexible choices for repayment with a tenure starting from 1 month to 96 months.
One can obtain a principal loan amount with a high value depending on the amount of insurance.
Get multiple withdrawal facilities on the sanctioned amount and pay for the unutilised position.
Since there is currently insurance coverage in effect, you get to ease the eligibility rules.
Seamless online application with quick disbursal.
To obtain this loan, only minimal documentation is needed.
This type of loan is subject to a small loan processing fee.
Get access to 24*7 customer support.
Flexible repayment with a foreclosure facility.

Eligibility for a Loan Against an Insurance Policy

In comparison to other types of loans, eligibility requirements for loans against insurance policies are rather flexible.

At least 21 years old
Whether employed by a company or alone, you have insurance.
A citizen of India
A minimum quantity of insurance coverage with a regular income.

Documents

To apply for this loan, you will need to submit the following important personal loan documents:

Duly filled application form with two passport-sized photos
The original statement of policy
Evidence of identification Passport, Voter ID Card, Aadhaar Card, and Passport
Evidence of residency Voter ID cards, driver's licenses, utility bills, and Aadhaar cards (water or electricity)
Evidence of income pay slips and a bank statement

Interest Rate

The number of premiums previously paid and the total number of premiums paid determine the interest rate charged in the case of a loan against an insurance policy. The rate of interest charged decreases as the premium amount and quantity increase.

FAQs

How Does LAP Work?

Loans against insurance policies are only available in conjunction with the pledge of certain classic policies, such as money-back and endowment plans. These policies include a life insurance component in addition to a savings aspect, which is what enables banks to accept them.

What Are the Benefits of a Loan Against Insurance Policy?

A loan against an insurance policy serves as a gem for a person in need due to the growing demand for various financing solutions. Borrowing money to meet a short-term necessity or an urgent need is one of the best options. Following are a few of the major advantages of this kind of loan:

Due to the insurance policy's inherent assurance, no additional collateral or assets are needed.
This form of loan typically has a lower interest rate than a personal loan.
There are extremely few chances that a loan application will be denied because the loan is already guaranteed by the insurance policy.
Even if the policy owner dies while the loan is still in effect, the outstanding loan payback amount is subtracted from the policy's cash value and the remaining sum is paid to the nominee.
Applying for a loan against an insurance policy is simple and quick thanks to online application options.

How to Apply for a Loan Against Insurance Policy?

One can speak with a representative directly by walking into any bank location to learn more information about the loan offer. One of the best ways to obtain knowledge and submit an application is through personal counselling, which is available here. Through direct communication with a bank, many questions can be answered.

For this loan, an alternative is to apply online. Undoubtedly, there is a quicker and simpler way to apply for this loan. Online document filing and approvals are other options offered by us. You may keep track of the progress of your loan application using an online tracking system. Our customer contact centres offer 24-hour service and can be contacted for more information on this loan.

Can I borrow money against any kind of insurance policy?

No, each bank and lender have a list of approved policies against which borrowers can apply for loans. These typically include whole-life plans, endowment plans, and unit-linked plans. Term insurance might not be included in this group.

How is the loan sum disbursed?

The majority of the loan against insurance is deposited into your account as an overdraft. The money in your account is always available for withdrawal. Only the amount that is used must be paid in interest.

Before obtaining a loan, must you have a life insurance policy?

Yes, the applicant must hold an insurance policy in their name to be eligible for a loan against the insurance policy. Only the owner of the policy will receive the loan.

How much money may I borrow?

In the case of conventional money-back or endowment insurance policies, a loan amount ranging from 80% to 90% of the surrender value of the policy is typically available.