The year 2020 has forced us to witness living through the worst-hit pandemic COVID-19. The substantial lockdown that leads to severe economic crunch has had numerous impacts on normal livelihood. A large portion of the population in our country face deferred and deducted salaries. There are even instances of some big entrepreneurs’ lay-off their employees to a great extent resulting in more jobless around. Many people are in urgent need of cash to keep on going these uncertainties while we can expect the situation to shuffle back to normal.
Personal loans are an easy source of cash though it involves very high-interest rates. In such a situation, there is an option of availing loan against some of the assets. The fundamental idea of life insurance policies is to assure our protection, but one can avail of a loan against a life insurance policy in the time of need.
First of all, we need to understand that loans can be obtained only against specific types of life insurance policies. A loan is available against the surrender value of permanent or whole life insurance, however, it is not permissible against term insurance. The term insurance does not have any cash value even after the expiry of the term, hence, are not suitable for a loan. Moreover, the timely payment of premiums for the last three years is an important factor for availing loans. A customer can visit his/her respective policy issuing branch to apply loan against life policy at a comparatively low interest.
The loan amount also differs as one cannot avail of any amount of loan. Generally, 85 to 90 percent of the surrender value of traditional life insurance plans is granted as loans. The loan facility is not certain against Unit Linked Insurance Plans (ULIPs). The possibility of a loan sanction against ULIPs is dependent on the worth current corpus amount.
The interest rate charged against an unsecured loan is much higher as compared to a loan against life insurance due to the security involved with the life insurance policy. The premium paid for a long time further reduces the rate of interest varying from 10 to 12 percent. On the other hand, the interest charge for a personal loan is as high as 12 to 18 percent. Hence, it is advisable to check out the varied options before availing a loan.
Different private, nationalized banks and other financial companies dealing in loans offer hassle-free loans on fulfillment of certain criteria. One can apply for loans on bank online portals as well. Antworks Money is also a trusted service provider offering solution to different types of loans and insurance. Customers can also apply loan against life policy through our trusted channels for speedy process. Hence, people can easily apply for loans at the time of crisis and fulfill their essential requirements.