Loan Against Insurance Policy: A Good Option To Meet The Need Of Money In Tough Times

Everyone has to face difficult economic situation at some point or the other.  Crores of families are facing financial crisis during the Corona period. At such a time, the most lack of money is felt. In such difficult times, your insurance policy can be very useful for you as a loan can be taken on it.

how much loan do you get

  • How much the loan will be available depends on the type of policy and its surrender value.
  • Usually 80 to 90% of the surrender value of the policy (final amount) can be availed .
  • However, you get this loan only if you have a money back or endowment policy.

surrender value

Special things related to surrender value

  • Refund of Surrender Value is available only in those policies in which insurance is included as well as investment.
  • There will be no surrender value in Pure Term Plan.
  • Endowment Plans like , 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.


  • Interest rate on insurance policy depends on the amount of premium and number of premiums paid.
  • The interest rate on loan against life insurance varies between 10-12%.

Unrefunded loan

  • Default in repayment of loan or default in payment of premium will result in lapse of the insurance policy.
  • The policyholder will have to pay premium on the loan taken against the policy in addition to interest.
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  • The insurance company reserves the right to recover the principal and outstanding interest amount from the surrender value of the policy.

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