{"id":4518,"date":"2025-07-21T17:55:20","date_gmt":"2025-07-21T12:25:20","guid":{"rendered":"https:\/\/kreditbazar.com\/blog\/?p=4518"},"modified":"2025-07-21T18:03:45","modified_gmt":"2025-07-21T12:33:45","slug":"loan-against-insurance-policy-2025","status":"publish","type":"post","link":"https:\/\/kreditbazar.com\/blog\/loan-against-insurance-policy-2025\/","title":{"rendered":"Loan Against Insurance Policy: Complete Guide 2025"},"content":{"rendered":"
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In times of financial need, a loan against an insurance policy<\/strong> offers a practical solution for Indian policyholders to access funds without sacrificing their life insurance coverage. By using your policy as collateral, you can borrow money to meet urgent expenses while keeping your long-term financial goals intact. As of September 30, 2024, the Insurance Regulatory and Development Authority of India (IRDAI)<\/strong> has mandated that life insurers provide loans against savings products, making this option more accessible. This guide explores everything you need to know about loans against insurance policies in India, including eligibility, benefits, risks, and expert insights, ensuring you make informed financial decisions.<\/p>\n\n\n\n

What is a Loan Against Insurance Policy?<\/strong><\/h2>\n\n\n\n

A loan against an insurance policy<\/strong> is a secured loan where your life insurance policy serves as collateral, allowing you to borrow money without surrendering your policy. This financial solution lets you access funds based on your policy’s surrender value while maintaining your insurance coverage 1<\/a> 2<\/a>.<\/p>\n\n\n\n

Unlike personal loans, this option helps you preserve your long-term financial protection while meeting immediate cash requirements. The loan amount is typically determined by your policy’s surrender value, and you can borrow up to 80-90% of this amount 3<\/a> 4<\/a>.<\/p>\n\n\n\n

How Does a Loan Against an Insurance Policy Work?<\/strong><\/h2>\n\n\n\n

When you take a loan against your insurance policy, the process works as follows:<\/p>\n\n\n\n

Step 1: Policy Assignment<\/strong>
<\/strong>Your policy is temporarily assigned to the lender as collateral during the loan term 5<\/a> 6<\/a>.<\/p>\n\n\n\n

Step 2: Loan Amount Calculation<\/strong>
<\/strong>The lender determines the maximum loan amount based on your policy’s surrender value. Most lenders offer 80-90% of the surrender value for traditional policies and 50-80% for ULIPs 7<\/a> 8<\/a>.<\/p>\n\n\n\n

Step 3: Interest and Repayment<\/strong>
<\/strong>You pay interest on the borrowed amount, and the policy continues to provide life coverage as long as premiums are paid regularly 9<\/a> 10<\/a>.<\/p>\n\n\n\n

Step 4: Policy Reassignment<\/strong>
<\/strong>Once the loan is fully repaid, the policy is reassigned back to you 11<\/a>.<\/p>\n\n\n\n

Types of Insurance Policies Eligible for Loans<\/strong><\/h2>\n\n\n\n

Eligible Policies:<\/strong><\/h3>\n\n\n\n