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Pointers to Bear in Mind When Purchasing a Loan Against a Life Insurance Policy

Life insurance policies now serve a dual purpose. It has always been known that life insurances protect us and our families from any kind of financial insecurities. However, now they can be used to also obtain a loan of up to 10 crores.

The loan so obtained can be used for a variety of purposes including those of a personal nature. The best part about these loans is that the rate of interest of such loans against securities is that their rate of interest is much lower than collateral- free loans.

There are three points which you must always remember before availing such loans.

These are :

Policies which can be Used

For availing a loan against a life insurance policy not all life insurance policies can be used. Financial institutions which offer such loans accept only specific life insurance policies, such as those which under its group companies. This ensures that your invested corpus continues to earn from the markets and you also enjoy a loan against it.

Value of the Loan

The loan amount which you can avail depends on different variables such as surrender value, time of buying the policy, premium payment, and current corpus. These accordingly determine the amount of loan you are eligible for.

Repayment of Loan against Life insurance policies​

The tenor of repayment of your loan will depend on a number of factors including the amount of loan and your salary among other factors. These variables are taken into consideration by the financial institution and accordingly the tenor is determined.

For more information, you should visit the website of such financial institutions. The application process is entirely online. As for eligibility, you need to be between 21 years and above with a regular source of income and the minimum value of your securities should be 10 lakh or above.

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