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You can take a loan on an insurance policy if you need money, you can get a loan easily and at low interest.

Personal Finance:You can take a loan on an insurance policy if you need money, you can get a loan easily and at low interest.

People are facing economic problems due to the Corona Crisis. In such a situation if you are also facing money problem and you have taken a life insurance policy then you can take a loan on it. Loans are easily available in exchange for a policy, plus you will have to pay less interest than a personal loan. These loans can be taken from banks or non-banking financial institutions (NBFCs). We are telling about it.

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How much loan is available The
loan amount depends on the type of policy and its surrender value. Usually the loan amount can be 80 to 90% of the surrender value of the policy. The loan amount can range from 80 to 90% of the surrender value. This amount of loan can be obtained only when you have a money back or endowment policy.

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What is Surrender Value?
In case of life insurance, if you surrender the policy before the stipulated time, you will be reimbursed some of the total amount deposited in the form of premium. There are also some charges. This amount is called the surrender value.

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Is there a surrender value on all life insurance policies?
Surrender value is refunded only in that policy, which also includes part of the investment along with insurance. So a pure term plan has no surrender value. As well as traditional plans like endowment, moneyback and ULIP have surrender value. Other than that you will get a portion of your money when you have paid a continuous premium for two years. In many companies this limit is even 3 years.

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How much interest has to be paid?
The interest rate on an insurance policy depends on the amount of the premium and the number of premiums paid. The higher the premium and the number of premiums, the lower the interest rate. The interest rate on life insurance loans is between 10-12%.

What happens if I don't repay the loan?
The insurance policy will lapse when the loan repayment is defaulted or the premium is not paid. The policyholder will also have to pay premium in addition to interest on the loan taken on the policy. The insurance company has the right to recover the principal and the remaining interest amount from the surrender value of the policy.

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Here are the required documents To get a loan on a life insurance policy you have to submit all the original documents of the policy along with the application form. A cancellation check must also be submitted to receive the loan amount. It is necessary to sign a contract to take a loan in exchange for an insurance policy.

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