One can face a financial emergency at any point in time. No matter how well aware you are of your present financial condition, there always remains a chance of facing unforeseen complications. It’s not that the problem will always be in the form of a financial crisis. Still, a crisis of any kind or type can trouble you financially simply because the monetary aspect has both a direct and indirect influence on our life.
The Quickest Possible Solution
Now, in times of financial crisis, we tend to opt for the quickest possible solution which is available in the form of personal loan. But do you know that you can solve the problem in another way? That is by taking a loan against a life insurance policy. When it comes to talking about having a life insurance policy, the first thing that strikes most of our minds is LIC. These are because most of us have a deep-rooted trust for LIC.
So, here we will be going to discuss some of the benefits of taking a loan on LIC policy:
Advantages of Taking a Loan on LIC Policy
Quick and easy availability of loan
It’s effortless to get a loan on LIC policy. The ready availability of loan makes it easy for one to deal with their immediate crisis. Also, the paperwork is less, which makes the process fast. Unlike other types of loan which takes a cumbersome and lengthy application process, getting a loan on LIC policy is very easy. It hardly takes a day or two to get a loan on LIC policy. In fewer instances, it takes a maximum of 3 – 5 days for the policyholder to get a loan.
Eligible for borrowing high loan amount
You can apply for a higher loan amount, though the availability and sanction of the loan vary from one insurance company to another. However, generally in case of getting a loan on LIC policy, the policyholder can get a loan equal to the surrender value of 80-90% of their plan.
Make it a note that the surrender value is calculated based on voluntary termination of an insurance policy. Suppose you have an insurance policy of Rs. 50 lakh and its surrender value is Rs 20 lakh then, possible chances are that the policyholder will get a loan of around 17-19 lakh.
Benefits of lower interest rates
In general cases, a loan borrower may have to pay a higher interest rate or as complied during the signing of insurance. In case of a loan on LIC policy, there is an exception for the policyholder. They have to pay low rates on their insurance. The LIC policy state that the interest rates charged against a life insurance policy depend upon the payment of premium and the number of premium paid. If the policyholder has paid more premium, and the number of payment is higher than it will lower the interest rate. Moreover, since the wealth is coming from the life insurance policy as collateral, so the interest rate is lower than an uncollateralized loan.
Lately, the current interest rate for a personal loan is 12-15%. While for a loan on LIC policy, the interest rate charged will depend. But, the interest rate is comparatively lower in the case of the latter one.
Loan on LIC policy is more secured
It is a pledge of the life insurance policy to provide security on the repayment of the loan. Hence, this helps you in paying lower interest rates. Moreover, as LIC is a trusted name for generations, their insurance policy always provides a sense of security.
Required limited scrutiny
As mentioned earlier that they’re a trusted service insurance provider for which you don’t have to scrutinize much about their service. Moreover, a policyholder can disburse his loan quickly in LIC. But the scenario may not be the same if you opt for other insurance companies as they tend to evaluate your credit score and can also change your interest rate for a loan.
What Policyholders Should Do
When it’s about an emergency financial situation, you should opt for a policy that can provide you with a fast and efficient service. And as discussed above, LIC through its benefit has made itself the top preference when it is about having a loan on LIC policy. Moreover, it is not just about the top five benefits of why you should opt for a loan on your LIC policy, but it should be worth the risk and cost that you are bearing. And since LIC is serving its customers for a generation with trust and integrity, you can always rely on them. In the time of crisis opting loan on LIC policy can give a long term benefit which will be the right decision to serve your needs.