Here’s how the process unfolds:
- Eligibility check: The policy should be an endowment or ULIP. Term plans are not eligible as they don’t carry surrender value.
- Loan amount calculation: Lenders evaluate the surrender value of your policy and typically offer a loan up to 95% of this value.
- Collateral pledge: Your policy is assigned to the lender. You retain the policy, but they hold it as collateral.
- Loan disbursal: Once approved, funds are usually transferred within 24–48 hours*.
- Repayment: You can repay via EMIs or, for flexi loans, withdraw and repay as needed, paying interest only on the used amount.
You stay insured while accessing liquidity, perfect for time-sensitive needs without financial compromise.
Quick liquidity without touching your savings? Get funds without surrendering your policy | Apply now
Key highlights at a glance
- Loan amount: Rs. 25,000 up to Rs. 25 crores*
- Eligible against endowment and ULIP policies
- Loan up to 95% of the surrender value
- Interest charged only on utilised amount (for Flexi variants)
- Keep your insurance and investment benefits intact
- Tenure up to 96 months
- Minimal documentation
- Quick disbursal – usually within 48 hours*
Benefits of taking a loan against a life insurance policy
A loan against a life insurance policy allows you to unlock liquidity without surrendering your long-term financial cover. Instead of breaking your policy midway, you can borrow against its value and continue enjoying protection and potential returns. Here are the key loan against insurance policy features that make it a practical funding option:
- Lower interest rates: Since the loan is secured against your policy, interest rates are usually lower than personal loans or credit cards, helping you manage borrowing costs better.
- No impact on policy continuity: Your life insurance policy remains active. You continue to receive policy benefits, bonuses, and coverage, provided loan repayments and interest are managed on time.
- Quick access to funds: The application process is relatively simple, with minimal documentation. This makes it useful for urgent financial needs without lengthy approval timelines.
- No credit score dependency: Approval is largely based on the policy’s surrender value, not your credit history, making it accessible even if your credit score is not ideal.
- Flexible end-use of funds: The loan amount can be used for various personal or business needs, such as emergencies, education expenses, or short-term liquidity gaps.
- Flexible repayment options: Many lenders allow flexible repayment, where interest can be serviced periodically or adjusted against policy proceeds if not repaid during the tenure.
- Preserves long-term savings: Instead of liquidating your policy and losing future benefits, this option helps you meet immediate needs while keeping your long-term financial planning intact.
Overall, a loan against a life insurance policy offers a balanced way to access funds while safeguarding your insurance benefits, making it a cost-effective and convenient borrowing solution.
Why consider a loan against insurance policy?
You might be thinking, “Why not just take a personal loan or dip into my savings?”
Here’s what sets this option apart:
1. You stay insured
Unlike surrendering your policy, this lets you access funds without giving up coverage or future maturity benefits.
2. Lower interest rates
Since this is a secured loan, interest rates tend to be more affordable than unsecured loans.
3. Quick and easy process
You don't need to go through extensive financial scrutiny. If you have a valid policy with a decent surrender value, approval is typically quick.
Who is it ideal for?
This type of loan works best for individuals who:
- Need urgent funds for medical, business, or education expenses
- Don’t want to break an FD or liquidate high-performing investments
- Are in the lock-in period of their policy but still need liquidity
- Want short-term borrowing without long-term financial disruption
In other words, it’s suited for calculated borrowers who want liquidity without compromising on protection.
What types of policies are eligible?
You can apply for a loan against:
- Endowment policies: Traditional savings-based plans.
- ULIPs: Investment + insurance hybrid policies.
Note: Term life insurance plans are usually not eligible, as they don’t carry a surrender value.
Not sure if your policy qualifies? Check if your ULIP or endowment is eligible | Take a quick scan
How much can you borrow?
The loan amount depends on your policy’s surrender value, that’s the amount you would receive if you voluntarily exited the policy today.
Here’s what most lenders offer:
Parameter
|
Range
|
Loan Amount
|
Rs. 25,000 – Rs. 25 crores*
|
Loan-to-Value (LTV)
|
Up to 95% of surrender value
|
Tenure
|
Up to 96 months
|
Disbursal Time
|
Typically, within 48 hours*
|
The more mature your policy, the higher your surrender value, and the more you can borrow.
What are your repayment options?
Most lenders offer two models:
Term loan
A standard repayment plan with EMIs over your chosen tenure. Best for one-time large expenses.
Flexi loan
A pre-sanctioned limit from which you can withdraw funds as needed. You pay interest only on the amount used. Great for variable or phased expenses.
Bonus tip: With some lenders, you can defer interest payments until after your policy's lock-in period ends.
Choose how you repay.
Withdraw multiple times. Pay interest only when used
Does it affect my insurance coverage?
This is the best part, your insurance continues as usual. That means:
- Your nominee stays protected
- Your investment keeps growing (in case of ULIPs)
- You retain maturity and tax benefits
However, if the loan is not repaid and the policy matures or is surrendered, the outstanding amount is adjusted from the final payout.
Stay protected. Stay funded. Keep your coverage while accessing funds. Apply now
How to apply for a loan against policy?
The application process is relatively simple.
Step 1: Click on ‘Apply’
Ready to begin? Just tap on the ‘Apply’ button on our page to start your journey.
Step 2: Fill in your basic details
We will ask for a few personal details like your name, PAN, date of birth, etc. It won’t take more than a minute!
Step 3: Verify your email
Enter your email ID, and we will send you a quick verification link. Just click to confirm and done!
Step 4: Add your policy details
Here’s where you enter your insurance policy number and other key info. This helps us build your custom loan offer based on your policy.
Step 5: Get your personalised offer
We will instantly evaluate your policy’s loan value and share a tailored loan offer, no guesswork, just a clear number you can count on.
Step 6: Complete your KYC
To move forward, complete a quick KYC verification. It’s digital, secure, and takes just a few steps. Once done, your sanction letter will be ready!
Step 7: Set up auto-repayment (E-mandate)
Next, register an E-mandate, this lets you repay your EMIs automatically, so you never miss a due date.
Step 8: Review and accept the loan terms
Go through the final agreement, give your consent, and you are almost there. We will prepare your loan for disbursal.
Step 9: Submit your insurance policy
Now, submit your policy document. We’ll do a final check to confirm the loan amount.
Step 10: Receive your funds
That’s it! Once we verify your policy, the loan amount is disbursed directly to your bank account. Fast, simple, and stress-free.
Documents required and eligibility criteria for loan against insurance policy
Eligibility criteria
You must fulfil certain conditions related to age, policy type, and surrender value to qualify.
- Age: Applicant should be between 21 and 90 years.
- Policy type: Only ULIPs, endowment, or money-back policies with surrender value are accepted.
- Surrender value: Policy must have a minimum cash/surrender value (usually Rs. 30,000 or more).
- Policy status: The policy should be active and free from disputes.
- Employment: Both salaried and self-employed individuals can apply.
- Nationality: Must be an Indian resident.
Documents required
Certain standard documents are needed to verify your identity, policy ownership, and financial details.
- Identity proof – Aadhaar, Passport, or Voter ID
- Address proof – Utility bill, rent agreement, or government ID with address
- PAN card – For verification and compliance
- Policy document – The insurance policy being pledged
- Bank proof – Cancelled cheque, bank passbook, or recent bank statement
- Additional papers – Any forms or declarations requested by the lender
Once submitted, approvals are often given within 24–48 hours*, and funds disbursed soon after.
How it compares with other options?
Feature
|
Loan against insurance
|
Personal loan
|
Collateral Needed
|
Yes (insurance policy)
|
No
|
Interest Rate
|
Lower
|
Higher
|
Loan Disbursal Time
|
48 hours*
|
2–7 days
|
Coverage Impact
|
None
|
Not applicable
|
Prepayment Charges
|
Usually, Nil
|
May Apply
|
Maximum Loan Amount
|
Up to Rs. 25 crores*
|
Up to Rs. 40 lakhs
|
If you have an insurance policy in force, this option could offer better flexibility, lower costs, and zero impact on your long-term plans.
Confused between loan types? Compare personal loan vs insurance loan. Make the smart move
Things to consider before applying for loan against insurance policy
A loan against insurance policy is a smart tool—but like all financial products, it needs to be understood well.
- Repayment impact: If you don’t repay, the lender adjusts the loan amount from the policy’s surrender/maturity value.
- Market risk (for ULIPs): Since ULIP values depend on market performance, the surrender value may fluctuate.
- Policy type: Only policies with surrender value, like endowment or ULIPs are eligible.
- Assignation: The policy is temporarily assigned to the lender and reverts to your name once the loan is repaid.
- Insurance impact: If the insured passes away during the loan period, the loan is deducted from the death benefit before the nominee receives the remaining amount.
Final thoughts
A loan against insurance policy is more than just an emergency measure. It’s a financial tool for those who plan smartly balancing liquidity and protection. Whether you’re facing a short-term need or eyeing a strategic opportunity, this type of loan allows you to act without dismantling your future plans.
Use your policy not just as protection, but as a lever for confident decision-making.
Be financially flexible without financial loss.
Get funds. Keep cover. Stay invested. Apply now
