Corona era: Crores of families are facing financial crisis. In difficult times, if you need money and you have an insurance policy, then you can take a loan on it. Loan is available more easily in lieu of insurance policy and interest is also reduced on it. You can take these loans through banks or non-banking financial institutions (NBFCs).
How much loan do i get
- How much loan will be given depends on the type of policy and its surrender value.
- Usually 80 to 90% of the surrender value of the policy (finally the amount received) can be availed.
- However, you get this loan only when you have a money back or endowment policy.
On surrendering a life insurance policy before running for a full period, some part of the amount paid as premium is returned. Charges are deducted in it. This amount is called the surrender value.
Special things related to surrender value
- Surrender value is refunded only in those policies in which investment along with insurance is also part of it.
- There will be no surrender value in the pure term plan.
- Plans like endowment, moneyback and ULIP have surrender value.
- The surrender value will be refunded only if the premium has been paid continuously for two years. In many companies this limit is 3 years.
- The interest rate on an insurance policy depends on the amount of the premium and the number of premiums paid.
- The loan interest rate on life insurance varies between 10-12%.
If the loan is not repaid
- An insurance policy will lapse if there is a default in the loan repayment or default in paying the premium.
- The policyholder will also have to pay the premium in addition to the interest on the loan taken on the policy.
- The insurance company reserves the right to recover the principal and outstanding interest from the surrender value of the policy.
There is a plan to open a joint account in the bank, know here the important things related to it