There may be many situations in life that may force you to borrow some large amount of money. Although there are alternatives such as credit cards and personal loans to cover your needs instantly, they may cost you. It is majorly because these two fund alternatives cough up higher loan interest rates.
In the same context, if you are already having an investment in the form of the life insurance policy, you can borrow funds against it at a lower rate. Yes, borrowing against life insurance could be easier to repay owing to a lower interest rate.
However, some of you may have doubts if taking a loan against life insurance policy is really a good idea or not. To clear your doubts, we are here to focus on some points that will clear your doubts.
Is Borrowing Against Life Insurance Policy a Smart Idea?
Reasons that make borrowing against life insurance a smart move –
Enjoy a loan of up to Rs.10 crore
You may have diverse needs of the shorter and higher loan value. It is not a good move to keep availing multiple loans for multiple reasons and increase your debt load. Hence, borrowing against life insurance for a large amount would help you only to acquire just one loan and pay one EMI. What’s more, you would be able to borrow as higher as up to Rs.10 crore. And it will assist you to cover all needs such as medical emergencies, business expansions, world tour, and many more.
The facility of the dedicated Relationship Manager
Prominent names in the lending industry will also let you assess the services of a dedicated Relationship Manager. This way, you can get a 24/7 assistance regarding your loan issues and resolve all super quick.
Easier and hassle-free repayments
When you decide to borrow against a life insurance plan, you should not worry about the repayments. Lenders also won’t charge any amount on making some prepayments and foreclosing the loan easier than scheduled.
Flexi loan facility
After you have availed the loan against an insurance policy, you have the authority to use the sanctioned loan limit as per your needs. Yes, you can borrow an amount out of your limit and pay just interest as EMIs and nothing more. Hence, you can focus on other things in life and adjust the remaining due after the end of the loan tenor. This way, you can save huge on your overall loan repayments and manage the monthly expenses super easy.
The easy online application process
Applying for the loan against insurance policy does not mean running from pillars to posts. Yes, to complete the loan formalities and get the money disbursed, you don’t need to worry. You can apply online at a lender’s website and furnish some documents to complete the application. You are also informed via the email or text message about the approval of the loan soon after the verification of the loan documents.
Hassle-free eligibility conditions
The eligibility conditions for letting you apply for the loan are not complicated. You only need to prove that:
- You are an Indian citizen
- Your age is at least 21 years
- You are either self-employed or salaried and having a regular source of income
- The minimum worth of the collateral should be at least Rs.10 lakh – it may also differ from a lender to lender
Enjoy better interest rates
Taking a long against your insurance policy can get you the finance on competitive interest rates as compared to a traditional loan. The rates are even better than taking a cash advance via any other means like a credit card. To make sure the loan meets your financial requirements without posing a burden on your finances you must – regularly pay off the minimum monthly due on the loan. This will also help you avoid the interest charges on the repayments or you can use your dividends to actively pay it off. You must bear in mind that even though you may avail the loan at a lower interest rate it may compound off quickly when not paid on time.
As a precaution when you do borrow against your insurance policy make sure to analyze the impact it has on the beneficiaries too. Draining off the full equity of the policy is not recommended as at times of emergency your family or you might have to bear the financial burden and either of you won’t be able to cash in on the policy, as intended. For instance, paying up for the funeral or setting any taxes or debts which are owed and this may not serve the purpose of having a policy.
You just went through some of the vital reasons why borrowing against life insurance policy is a smart idea. If you are ready to apply, you can do that online right away!
There are various financial institutions and lenders in the country who are there to make an offering of the pre-approved offers on loan against a life insurance policy, home loans, business loans and more.
Such offers are designed to make your entire loan processes fast and hassle-free. So if you are looking to apply for a loan against life insurance policies, choose your lender wisely and check the eligibility criteria and the interest rate against it.