Get Instant Loan Against Insurance Policy

A loan against an insurance policy is a type of secured loan where you use your life insurance policy as collateral. It allows you to borrow money from the insurer or a financial institution against the policy’s surrender value, usually at a lower interest rate. This option is typically available for traditional life insurance plans like endowment or whole-life policies, not term insurance.

Yes, you can borrow against a traditional life insurance policy that has a cash or surrender value, such as an endowment or whole-life policy. The loan is secured by the policy itself, and the amount you can borrow typically depends on the surrender value accumulated over time. However, you cannot borrow against a term insurance policy, as it does not have a cash value.

The interest rate on a loan against an insurance policy typically ranges from 8% to 12% per annum, depending on the insurer and the type of policy. Some insurers may offer slightly lower or higher rates based on their internal policies, the policy’s surrender value, and how long the policy has been in force. Rates are generally lower than unsecured personal loans since the insurance policy serves as collateral.

Surrender value is the amount a policyholder receives from the insurance company if they decide to terminate a life insurance policy before its maturity. It is the cash value that has accumulated over time, based on the premiums paid and the duration the policy has been active. Typically, surrender value becomes available after a minimum lock-in period, usually 2–3 years for traditional policies. This value is also the basis for calculating loan eligibility against the policy.

The loan amount you can get against your insurance policy typically ranges from 85% to 90% of the policy’s surrender value. The exact amount depends on the type of policy, the insurer’s terms, and how long the policy has been active. Only traditional life insurance policies with a cash value, such as endowment or whole life plans, are eligible. Term insurance policies do not qualify for such loans.