Loan against insurance policy is a wise decision as it helps to liquify the policy without having to break it. Though, it must be noted that you can avail loan against some traditional plans only like endowment plans and money-back. Lenders offer up to 85-90% of the insurance policy as loan.

This is based on the surrender value of the loan which the policy must have. In addition, the policy holder can apply for the loan against insurance policy only after paying the premiums for up to three years.

Here are some things which you must keep in mind to avail a preferable loan against your insurance policy -

  • The policy has acquired a surrender value when you pay premiums towards it for a minimum period of three years.
  • The loan amount and other terms will vary based on lender’s criteria and individual profile of the borrower.
  • Interest rate on the loan will depend on the premium and that which is due. In approximate terms it is taken as more the premium paid the lower the rate of interest that is charged.
  • Leading NBFCs offer two types of repayment options to borrowers of the loan - with interest and without interest. It is, therefore, important to pay back the loan prudently.

The loan can be used to cater to any kind of financial obligations be it personal or professional as lenders do not scrutinize the use of the loan. Moreover, the loan process is quite simple and the policyholder does not have to undergo a stringent scrutiny to get the loan. Apart from the income, the policyholder's repayment history or creditworthiness is taken into account while deciding the loan.