If you are in an emergency situation and need cash urgently, you can apply for a loan on the insurance policy. Your life insurance policy provides you protection, as well as long-term financial security at difficult times.
Which Insurance Policies can help you avail loan?
Loan on insurance policy like the money-back policy, endowment policies and unit-linked policy can be utilized for a loan. For these insurance policies, you pay premiums for at least three years; hence they are eligible for a loan. But the term insurance doesn’t help you avail loans, as it does not carry any surrender value.Benefits of loan against insurance policy:
- No need for CIBIL Score: When sanctioning loan on an insurance policy, banks don’t check your CIBIL score. So, getting a loan against insurance is a good option for people with low CIBIL score.
- Low-interest rate than other personal loans: Loan on an insurance policy is considered one of the great personal loan alternatives. This is because the interest rate on loan against insurance is only 10.50% to 12.50%, whereas on personal loans you generally have to pay interest somewhere between 12% and 24%.
- Quick loan disbursement: To avail a loan against insurance, there is a minimal amount of documentation and fewer chances of rejection. So, it gets sanctioned quickly compared to other loans.
- Tax benefit if used to buy or construct a house: The interest on loan against insurance policy can be deducted from the chargeable income under the head “income coming from your house property.” However, this loan amount must be used for repair or reconstruction of the property.
To Know more about the loan against an insurance policy, click here: Loan Against a Life Insurance Policy: Good or Bad?
Alisha Antil is your best financial helper for insurance. She has a vast experience in finance and insurance and provide to you the expert advise in insuring your property and health.
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