A life insurance plan is subjected to an amount paid for the financial protection of a family. Previously, this insurance plan was intended for the financial integrity of a family. Later on, the term insurance has been subjected as a criterion for a loan application too. The versatility of this insurance scheme is now being used by the modern population for seeking a loan from India loan services different purposes.
Things to know regarding loan against term insurance
The first thing that you have to find out is whether the online life insurance policy you have chosen is eligible for seeking a loan from a banking institution or not. There is a limitation that the term insurance will not mature until the end of the allocated time span. Apart from the income factor, the amount subjected to the term insurance plan will be eligible for seeking loans.
This is the second deciding factor that a bank or any other financial institution will scrutinize. The surrender value of the life insurance online policy you have chosen will decide the loan amount you can seek. It will depend on the contemporary value of the insurance plan if the plan is considered by the loan provider.
Rate of interest
The third factor that a borrower should know is that the rate of interest will depend on the amount and number of insurance premiums you have paid to the insurer. The rate of interest of a loan against policy will reduce to a considerable extent depending on the volume of premiums paid in the past. Despite the fact, this insurance-based loan might cost you a higher rate of interest than the conventional ones. It ranges from 10% to 14% depending on the nature of life insurance plans you have chosen. LIC India charges 9% which needs to be paid biannually. The minimum tenure set for such loans is 6 months.
The insurance company will release the necessary documents for a loan application. In the contemporary market, documentation for online loan services is not that critical. You will have to sign a deed for assigning the benefits to the chosen lender. Your life insurance policy will be considered as collateral and the decided loan amount will be disbursed.
The borrower will have to pay premiums after getting a loan too. The loan services online in India will describe the monthly act and you will figure out what to do. If there is any discrepancy regarding payment of premiums, the term loan might get terminated.
Seek professional assistance to find the loan & insurance affordable plans from a provider. Choose the right plan as per your capabilities.