Outlook Money
When one faces a difficult situation like an emergency and requires money, people tend to take personal or gold loans and borrow money. In such situations, a loan against a life insurance policy is also a credible approach to meet needs.
Many life insurance policies come with benefits where policyholders can take a loan when offered a life insurance policy as collateral. for applying, the policyholder must contact the insurance agent to know the process, and other details like terms and conditions related to it, etc.
1. Required Documents: While applying for a policy loan, one needs three basic documents in addition to others mentioned by the insurer. These include a loan application form, original life insurance policy, and signed agreement between the insurer and the insured.
Surrender Value is the amount policyholders receive if they choose to terminate a policy before its maturity. Usually, these loans are granted against the surrender value of traditional policies.
Policyholders pay interest on the policy loan. However, the loan against policy service avoids the lengthy loan procurement process and mostly has lower interest rates than a personal loan.
The loan amount that you get against the policy depends on the Surrender Value that the life insurance plan has acquired to date.