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How to Avail Loan Against an Insurance Policy in India

If you have invested in an insurance policy, then the best recourse is to let it mature over time. This is because it lets you and your family from emergencies and unforeseen incidents in the future. For such a reason, it is best not to remove your policy from your portfolio.

However, there are instances wherein we find ourselves requiring money on a very urgent basis. During such times, it is close to impossible to liquidate our investments including insurance policies on a short notice. The alternative in such a case is to use the insurance policy as a security and obtain a loan against insurance policy.

loan against insurance policy

Loan against securities such as insurance policies can thus offer cash-infusion for your short term needs. There are a number of other benefits, which are as follows -

Various Insurance Policies Can Be Used

Lenders accept a wide range of insurance policies when offering a loan against securities. However, this varies from one lender to the other. This is because some lenders accept high-value insurance policies but do not accept ULIPs and other such term insurances. There are also lenders who prefer lenders prefer specific money back policies based on their net worth. Thus, you need to check the lender’s prescribed insurance policy list before applying.

High-Value Loans

Lenders usually take into consideration the value of your insurance policy when offering a loan. Thus, the higher the value of the policy, the higher will be the loan amount sanctioned. There are also lenders who sanction a loan based on the amount of premium that you already paid for your insurance. This distinction is mostly done when you have a very high premium apart from your insurance’s net worth. This has the added benefit of offering a high-value loan at a very competitive interest rate.

Other Benefits


While the exact amount of loan varies from one lender to the other, some of the leading lenders offer loans of up to Rs. 10 crores. There are no part-payment or foreclosure charges, the documentation is minimal and you get dedicated relationship manager for all your requests.


All these benefits vary from one lender to the other. So ensure that you search for the right lender before applying for a loan against insurance policy in India.

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