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. 

Since cash crunches have become a common phenomenon, having affordable funding solutions is an essential requisite. Having said that, these funding solutions need to be really affordable and accessible in order to be helpful.

For instance, a loan against mutual funds which lets people mortgage their mutual funds bonds and avail a loan against it can be a good option. However, in order to optimize the facility to a maximum, the applicant must be completely aware about all the ins and outs. Hence, on a similar note, below is a small guide on how to get a loan against property. 

What is a loan against mutual funds? 

A loan against mutual funds is a type of mortgage loan wherein the applicant gets to pledge their bonds and other securities as collateral to borrow a loan. The said facility can be availed from any bank or NBFC given the borrower has the required creditworthiness. The best part about this facility is, the borrower gets the desired financing while securing the maturity value of the investment at the same time.

How to apply for a loan against bonds? 

The application procedure is very simple. You can visit the nearest branch of the bank or NBFC you wish to proceed with for the loan and apply then and there. You can also use the online application feature provided by the lender to avail the loan. Just navigate to the online application feature, fill in the application form, attach all the necessary documents and then submit it. Once approved, the money will be disbursed directly into your bank account.

To know more about this facility, click here: A Handy Guide on How to Take a Loan Against Mutual Funds    

Know 3 major benefits of availing a loan against security.