Life insurance loan
Foreword: A loan from an insurance company secured by the cash value of a life insurance policy. The loanable amount of the policy loan for this type of loan depends on the effective year of the policy; the age of the insured when the policy is issued, the death benefit amount. Policy loans are usually available for these policies, but the specifics depend on the specific terms in the insurance contract. The first advantage of life insurance loans is that when the life insurance policy is valid, customers can continue to enjoy the insurance coverage stipulated in the policy during the policy loan period.
When the insured’s capital cannot be opened, the policyholder can be mortgaged to the insurance company to obtain funds according to a certain proportion of the cash value of the policy, thereby alleviating the cash pressure. So, can life insurance take out a loan? Next, the editor will take you to understand the knowledge of policy loans.
Policy Loan Definition
The so-called policy loan refers to a loan method in which the policyholder mortgages the policy he holds to the insurance company and obtains funds according to a certain percentage of the cash value of the policy. Since the customer’s insurance protection is not affected during the mortgage loan process, the insurance policy is still valid.
A loan from an insurance company is secured by the cash value of a life insurance policy. The loanable amount of the policy loan for this type of loan depends on the effective year of the policy; the age of the insured when the policy is issued, the death benefit amount. While recent policies typically only allow borrowing at rates linked to the money market, such loans to policyholders tend to be offered at rates below market rates.
If the insured does not repay the loan, the loan principal and interest will be deducted from the death benefit of the life insurance policy. Generally, policy loans are only available for policies with ‘cash value’. Long-term life insurance with saving nature, such as endowment insurance, whole life insurance, pension insurance, universal insurance, participating insurance, etc., one year after the policy is insured, the policy begins to have cash value, and the longer the payment time, the greater the accumulated cash value. high. Policy loans are usually available for these policies, but the specifics depend on the specific terms in the insurance contract.
Life Insurance Loan Advantages
First, when the life insurance policy is valid, the customer can continue to enjoy the insurance coverage stipulated in the policy during the policy loan period. Compared with surrender, the policyholder does not need to worry about losing coverage due to surrender and can avoid the loss of surrender charges.
Second, the life insurance policy loan application method is simple and convenient. The insured only needs to bring the insurance policy, valid identification, and the insured’s written consent to the loan application to the insurance company in person. Taiping Life said that as long as the lender brought all the materials, the insurance company could complete the business on the same day. Under normal circumstances, the loan will be remitted to the bank account designated by the lender, and the loan arrival time is generally 1-3 days.
Third, the interest rate on loans to insurance companies through life insurance policies is generally lower than that of banks.
Is life insurance loanable? Life insurance policies can be used as collateral for loans to insurance companies. The loan processing method of life insurance policy is simple and fast, the loan interest rate is generally lower than that of the bank, and the customer’s insurance protection is not affected during the process of pledging the loan, and the policy is still valid, which is a very convenient way of borrowing.
