Claim Settlement Ratio of 99.23%~
Loans against insurance policies can be a strategic financial tool. They allow policyholders to borrow money from their assets or accounts using the surrender value of their life insurance policy, which they have accumulated over time.Read More
These loans provide access to liquid funds to meet short-term financial needs while keeping the insurance policy alive1(251) and maintaining the insurance coverage2.Read Less
Tailored Life Insurance Solutions for your long-term Life Goals.
As its name suggests, a loan against an insurance policy is like availing a loan using your insurance policy as collateral. These loans can be availed by the policyholder who is in immediate need of money from their insurance provider against the surrender value of the policy. Loans against insurance policies can be availed only on policies that have a savings component and have accumulated surrender value2. These options are available in money-back or endowment plans that have acquired a surrender value2 by payment of premiums for a specified tenure.
A loan against an insurance policy can be advantageous for several reasons and, in various situations, effectively maximising your policy’s potential. Here are some of the reasons you should consider a loan against insurance to understand “when and why to consider a loan”.
The interest rates charged on loans against an insurance policy by the insurer are usually lower than the interest rates on personal loans as loans against insurance are secured loans backed by the surrender value of your insurance policy . The interest rate on a loan against insurance depends on the premium paid for the policy and the frequency of premium payments. The higher the premiums paid and the more number of times, the lower the interest rate3 and vice versa.
With a loan against your insurance policy, you can get a high loan value as the maximum amount of the loan against the insurance policy depends on the surrender value of the policy. It may usually range upto 90% depending on the product terms and conditions , of the surrender value of your insurance policy and may also vary from one insurer to another4.
Loan against an insurance policy is quick and hassle-free. You do not need to submit extensive documents or information to the insurance provider since they already have your information and documents. Further, these loans are not delayed and issued within minimal days.3
One key reason to consider loan against an insurance policy is liquidity. You can get easy access to funds from your policy ensuring a financial cushion during emergencies continuing the policy coverage and without the need to surrender your policy. It can also be a strategic move for investment purposes.
Your life insurance policy is a useful financial tool that offers insurance protection, helps you create a corpus for your financial goals, helps in saving tax (under old tax regime and subject to certain conditions), and also offers financial help through loans. To maximise your policy’s potential, here are some tips that can help –
This would enhance the surrender value of your policy and you will be able to get a higher loan amount.
The longer the policy term passes, the higher the surrender value gets. This also allows you to get a higher loan amount.
Non-payment of the loan might result in foreclosure if the outstanding loan and the applicable interest exceed the surrender value. Foreclosure means cessation of the policy benefits and coverage. To avoid this, repay the loan or the interest timely to maintain the loan below the surrender value.
You can consider a loan against an insurance policy in events where immediate funds are required, such as unexpected medical expenses, paying off high-interest debt, home repairs, or even investment purposes for potential. These loans are an easily accessible option for individuals who do not have a good credit score to obtain any other loan.
Once you understand the when and why to consider a loan, it is much easier to decide. Loans against an insurance policy can be a practical financial tool when you need immediate financial assistance or funds for a specific purpose. These loans allow the policyholders to access surrender quickly while leveraging the surrender value of their insurance. Loan against insurance is often favored for its flexible repayment terms, lower interest rates, and easy accessibility, making it an appealing alternative to traditional or commercial loans.
Charges and application fees for a loan against an insurance policy differs for insurer to insurer. You can get in touch with your insurance company to understand the terms and fees before making a loan application against your insurance policy.
Yes, taking a loan against the insurance policy affects the loan, too. Insurers generally charge interest on policy loans, which are payable annually or semi-annually. The interest amount is added to the outstanding loan amount if it is not paid. The accumulated surrender value of the policy will be sufficient to repay the loan as long as the premiums are paid in time and the policy is in force. However, if no new premiums are forthcoming and if the policy is in a lapsed condition, then a situation may arise where the outstanding loan, including the unpaid interest (the total debt) is higher than the surrender value of the policy.
The insurer cannot allow such a situation and it may take a loan foreclosure action. A notice is served to the policyholder and the policy is terminated. In such a case, the subsisting surrender value of the loan is adjusted to outstanding amount of the loan and interest. Excess, if any is paid to the policyholder1(252).
You can repay the loan as and when suitable to you during the tenure as per terms and conditions. The policy remains unaffected by early repayment of the loan.
Reference:
BJAZ-WEB-EC-11417/24
A suitable financial plan may be defined by its components. Amongst other things, one aspect, it may be incomplete without, is a steady amount of investment.
Read More
A suitable financial plan may be defined by its components. Amongst other things, one aspect, it may be incomplete without, is a steady amount of investment.
Read More
A suitable financial plan may be defined by its components. Amongst other things, one aspect, it may be incomplete without, is a steady amount of investment.
Read More
A suitable financial plan may be defined by its components. Amongst other things, one aspect, it may be incomplete without, is a steady amount of investment.
Read More
~Tax benefits as per prevailing Income tax laws shall apply. Please check with your tax consultant for eligibility.
*Conditions Apply – The Guaranteed benefits are dependent on policy term, premium payment term availed along with other variable factors. For more details please refer to sales brochure.
Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.
For more details on risk factors, terms and conditions, please read sales brochure carefully before concluding a sale. The terms and conditions of product/plan as contained in the Policy Document issued by the Company is available on the Web Site. The names of the Company, Products/Plans/funds do not indicate the quality and its future prospects or returns. IN ULIPs, THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER. Unlike traditional products, Unit linked insurance products are subject to market risk, which affect the Net Asset Values & the customer shall be responsible for his/her decision. Tax benefits are as per the prevailing Income Tax Laws including the Income Tax Act, 1961 and are subject to change from time to time. Goods and Services Tax will have to be borne by the Policyholder as per applicable rates. All other charges shall be levied in accordance with the terms and conditions of the policy.
This calculation and results displayed are based on information provided and certain assumptions about the rates of return. It is for assistance only and does not constitute an offer or solicitation. It is not intended to be and must not alone be taken as the basis for an investment decision. Kindly note that the returns are only illustrative and they are not guaranteed. The returns do not indicate the upper or lower limits of the return that you may get with your policy and the value is dependent on a number of factors including future performance. Bajaj Allianz Life Insurance Company Limited shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information reported by the calculator.
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