Trusted Loan Against Insurance Policy Brokers in Chennai
Getting a loan against your insurance policy is a smart way to unlock funds without surrendering your life insurance. It is especially helpful when you need money urgently but don’t want to lose your policy benefits. By pledging your policy as collateral, you can borrow a certain percentage of its surrender value. This option is ideal for policyholders who need short-term financial support but wish to keep their long-term coverage intact.
At Finmarra, we help you access loans against life insurance from trusted lenders. Our process is simple, fast, and transparent. Whether you hold a traditional endowment policy or a money-back plan, our experts evaluate your insurance value and assist you in getting the best possible deal. You continue to enjoy your life cover while using the policy’s surrender value to raise funds.
Eligible Insurance Types for Loan Against Insurance Policy
Traditional Life Insurance Policies
Endowment plans and money-back policies are widely accepted. These plans build a cash value over time, which makes them suitable for loans. The loan amount is generally based on a percentage of the surrender value of the policy.
ULIPs (Unit Linked Insurance Plans)
Some ULIPs qualify for loans, especially those with a strong fund value. However, not all insurers allow this. You need to check whether your ULIP permits partial withdrawals or loans based on its current investment value.
Term insurance Exclusions
Term insurance plans do not qualify. These policies offer only life coverage without building any cash value. Since they have no surrender value, lenders do not offer loans against them.
Factors to Keep in Mind When Taking a Loan Against Insurance
Quick Disbursal
Loans are processed quickly as insurers offer funds based on surrender value, making it faster than unsecured loans.
Low Interest Rates
Since the policy acts as security, interest rates are lower compared to personal loans.
Keep Your Policy Active
You don’t need to surrender the policy. It continues to offer life coverage while you repay the loan.
Flexible Repayment
Many lenders offer interest-only payments during the tenure, with the principal to be paid at maturity.
No Credit Score Dependency
Your credit score is not a primary factor since the loan is backed by an active insurance policy.
Loan Against Insurance Policy & Interest Rates Explained
The interest rates on loans against insurance are usually lower than personal loans or credit cards. However, the actual rate depends on a few important factors:
Average Interest Rates
Most lenders offer rates between 9% and 12% per annum. This is much lower than unsecured loans, which often charge above 15% or more.
Factors That Influence the Rate
- Policy Type: Endowment and money-back policies with higher surrender value tend to get better rates.
- Loan Amount: Higher loan amounts may attract slightly better rates, depending on the insurer’s terms.
- Insurance Provider Rates vary depending on whether the loan is offered directly by the insurer or a third-party lender.
- Loan Tenure: Shorter tenures may come with slightly lower interest rates compared to longer ones.
Some insurers charge a fixed interest rate, while others calculate it based on a daily or monthly reducing balance. At Finmarra, we help you compare lenders and choose the one offering the best interest terms based on your policy and needs.
Connect with Our Investment Agents to Build Your Wealth Now
What Documents Are Needed for a Loan Against Insurance
Original Policy Document
The insurer needs the original policy as proof of ownership and to verify the terms. This is also required for assigning the policy to the lender.
KYC Documents (Aadhaar, PAN, Photo)
Your identity and address proof are mandatory under RBI guidelines. Aadhaar and PAN are standard requirements. One passport-size photo is also needed for records.
Loan Application Form
The lender provides this form. It includes basic information about you, your policy, and how much of a loan you are seeking.
Assignment Form in Favor of the Lender
volatility. We guide you through economic trends to protect your investments.
Tax Benefits
This is a legal document that assigns your policy rights to the lender. Until the loan is repaid, the lender becomes the beneficiary of the policy. Once you repay, the policy is reassigned back to you.
Benefits of a Loan Against Insurance
Easy Access to Funds
Since you’re borrowing against your policy, there’s no need for a credit score check or complex paperwork. Lenders approve loans fast, usually within a few working days, as long as your policy has sufficient surrender value.
Flexible Loan Tenure
Repayment options are flexible. Some lenders allow you to pay only the interest during the loan term and repay the principal later. This works well if you need short-term funds but don’t want a heavy EMI burden.
Maintain the Policy While Borrowing
You can keep your life insurance active even after taking a loan. As long as you repay on time, the policy remains intact. This means your life cover continues and your savings stay secure.
Lower Risk of Rejection
Since the loan is secured against the policy’s surrender value, lenders face less risk. This increases acceptance chances, especially for people with low credit ratings or insufficient income evidence.
Who Should Consider a Loan Against an Insurance Policy?
1. Policyholder Must Be the Owner
The loan can only be taken out by the person who owns the insurance policy. If you are the nominee or a beneficiary but not the actual policyholder, you cannot apply for a loan. The name on the loan application and policy document must match.
2. Policy Should Have Surrender Value
Only insurance policies with a cash or surrender value are eligible. Traditional life insurance, endowment plans, and some ULIPs qualify because they build value over time. Term insurance does not qualify since it offers no maturity benefit or cash value.
3. Policy Should Be Active and Paid Up
The insurance policy must be in force. This means you should have paid all the required premiums up to the date of applying for the loan. If your policy has lapsed or is inactive, lenders will not consider it.
4. Minimum Policy Age Requirement
Many lenders require the policy to be active for at least three years. This ensures the policy has accumulated some surrender value, making it a viable security.
5. Policy Should Be Issued by Approved Insurers
Loans are available only if your policy is from a recognized insurance provider. Some lenders maintain a list of approved insurers, and policies from those companies are accepted more easily.
6. Age of the Borrower
The typical borrower must fall within the age span of 21 through 60 years old. Lenders sometimes marginally change the acceptable age range for borrowers.
Why Choose Finmarra For a Loan Against Insurance Consultation?
Quick & Hassle-Free Process
From document checks to lender coordination, we handle everything smoothly so you can get your loan approved without delays.
Quick & Hassle-Free Process
From document checks to lender coordination, we handle everything smoothly so you can get your loan approved without delays.
Easy Eligibility Check
Just share your policy details, and we’ll quickly tell you whether you're eligible and how much you can borrow.
Easy Eligibility Check
Just share your policy details, and we’ll quickly tell you whether you're eligible and how much you can borrow.
Competitive Interest Rates
Assist you in finding lenders that provide the lowest possible rates based on the value and terms of your insurance policy.
Competitive Interest Rates
Assist you in finding lenders that provide the lowest possible rates based on the value and terms of your insurance policy.
Secure Policy Handling
Your policy remains safe, and we assist in the assignment process with proper care and complete confidentiality.
Secure Policy Handling
Your policy remains safe, and we assist in the assignment process with proper care and complete confidentiality.
Everything You Need to Know About Loan Against Insurance
