Turbulent times may strike anytime on anyone in the form of unemployment, accident, or any other health issues. In such a scenario, asking out for a personal loan may be the only viable option that exists at that point in time. However, once you borrow money, the interest rate is automatically applied to the entire principal amount, and you may require longer periods of time to repay the same.
Again, banks issue a fixed period of time to repay the loan you have taken, and taking a personal loan becomes quite a hassle. This is where a personal loan against insurance comes into play. Under the personal loan against an insurance policy, you vow your financial assets like mutual funds, stocks, and bonds to the specific bank that offers you the loan. The interest rates are applicable to only the funds that have been borrowed.
Globally speaking, the concept of loans against insurance policy has earned quite a good reputation. In the Indian banking setup, too, this scheme is available but yet to gain large scale popularity among the masses.
The following are the main features of this loan:
|Lower age limit||18 years|
|Upper age limit||65-70 years of age|
|Employment status||Self employed or receiving income|
|Minimum income||3,00,000 INR per annum.|
|Work experience||Minimum 1- 1.5 years|
|Maximum loan amount that can be issued||Up to Rs.25 crore*|
|Credit score||A good CIBIL score of 750 and above|
|Repayment period||Ranges from 15-20 years.|
For self employed applicants the eligibility criteria furthers as follows:
|Minimum business experience||Varies as per the bank|
|Minimum profit after tax||2,00,000 INR|
|Minimum prior relationship with lender||At Least a period of 6 months|
*Depends on the policy terms & conditions
Considering obtaining a Cash loan in times of turmoil comes with its own sets of worries like spending a major chunk of your money repaying the loan in a fixed period of time. To put an end to this, loan against life insurance policy offers a better alternative with added advantages.
You can apply both online or offline. However, the first thing you should do is ask the bank or the insurance company regarding how much loan you are eligible for. Then, you have to assign the policy to the lender. This means that all the rights of the policy will be transferred to the lender.
It usually takes 3-4 days to sanction the loan, however this may vary from lender to lender.
Application for loan against policy requires basic documents like:
Saving for emergencies is a good measure to up your game and have yourself prepared. However, the latest concept of loans against life insurance policies prove to be a game changer for people who do not wish to deal with the after-math of taking a cash loan. These schemes are user friendly , allowing a minimal interest rate based upon the premium payments and very flexible periods for repayment. If you are looking to avail health insurance or personal loan through a fast, 100% paperless and zero hassle process – you can do so with Navi App.
Some of the advantages are:
Some of the disadvantages of loan against insurance are:
Tenures are usually flexible and can vary from lender to lender. You can get in touch with your lender to understand the exact terms and conditions of your loan against insurance.
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