Check your eligibility
What These Loans Fund
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A loan of typically 80 to 90 per c...
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Policies that have acquired surren...
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Endowment
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Any lawful end use
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Continued life cover throughout th...
Who Can Consider This Loan?
- Ownership of the assets being pledged, in your own name
- Assets on the lender's approved list of pledgeable securities
- Minimum holding value set by the lender
- KYC completed with the lender
- For insurance policies, a policy that has acquired surrender value
What May Not Be Funded?
- Pure term plans, which have no surrender value
- Policies within the minimum premium-paying period
- Amounts above the funding percentage of surrender value
- Policies already assigned to another party
- Group policies and employer-held cover
Always check the sanction letter before you commit.
Why Choose Wealth & Covers?
- Expert advice to choose the right plan
- Plans from leading loans companies
- Hassle-free process and documentation
- End-to-end support, including claim assistance
- Dedicated relationship manager
- Expert Guidance Personalised advice from experienced loans professionals.
- End-to-End Support From choosing the right plan to claim assistance, we are with you always.
- Claims Assistance Hassle-free claim support to ensure you get what you deserve.
- Transparent Process Clear information, easy documentation and a hassle-free experience.
Overview
A loan against an insurance policy borrows against the surrender value that an endowment, money back, whole life or ULIP policy has accumulated. The policy remains in force, the life cover continues, and the loan is repaid from your own funds or adjusted against the eventual proceeds.
The alternative most policyholders consider is surrendering the policy. That is almost always worse: you lose the cover, you receive a surrender value well below what you have paid in, and deductions claimed under Section 80C in earlier years can be reversed.
Only policies with a surrender value can be pledged. Pure term plans have none, and cannot be borrowed against — a point worth knowing before planning around a policy you hold.
Who should consider it
Holders of endowment, money back, whole life or ULIP policies with accumulated value. Anyone considering surrendering a policy for cash. Policyholders needing modest short-term liquidity without disturbing other investments.
Benefits
- The policy stays in force and the life cover continues
- Avoids the poor value of an early surrender
- Rates well below unsecured borrowing
- Available directly from the insurer, or from a bank against the policy
- No credit assessment in most cases
- Repayment can be flexible, with adjustment against proceeds if needed
What the loan funds, and what it does not
Read the right-hand column first. It is the one that decides how much you have to arrange yourself.
Usually funded
- A loan of typically 80 to 90 per cent of surrender value
- Policies that have acquired surrender value
- Endowment, money back, whole life and ULIP policies
- Any lawful end use
- Continued life cover throughout the loan
Usually not funded
- Pure term plans, which have no surrender value
- Policies within the minimum premium-paying period
- Amounts above the funding percentage of surrender value
- Policies already assigned to another party
- Group policies and employer-held cover
Funding limits and the treatment of add-ons vary between lenders and move with the borrower profile. The sanction letter you receive is what governs — we will walk you through it before you sign.
How it works with us
- 1 We look at what you already hold Mutual funds, deposits, shares, bonds and policies. Most people needing a personal loan are holding something cheaper to borrow against.
- 2 Eligible value calculated after haircut Lenders lend a percentage of market value, and the percentage varies sharply by asset. That number decides what you can raise.
- 3 Lien or pledge marked The asset stays yours and keeps earning. A lien is recorded so it cannot be sold while the loan runs.
- 4 Limit sanctioned, usually as an overdraft You draw what you need and pay interest only on that. For an uncertain need this is far cheaper than a term loan.
- 5 Margin monitored while the loan runs For market-linked assets we flag it if a fall approaches a margin call, so you are not surprised by one.
Important considerations
The things a brochure tends to leave out. Read these before you decide.
- The loan is against surrender value, not sum assured. On a policy a few years old the surrender value is a small fraction of what you have paid, so the amount available is often modest.
- Do not surrender the policy instead. Early surrender values are poor, you lose the cover, and Section 80C deductions claimed earlier can be reversed.
- Keep paying the premiums. A policy that lapses while a loan is outstanding creates a problem, and the insurer can adjust the loan against whatever value remains.
- Compare the insurer's rate against a bank loan on the same policy. Both routes exist and the pricing differs.
- Any outstanding loan reduces the death benefit paid to your nominee. That is worth explaining to whoever depends on the policy.
Documents required
- Identity proof — Aadhaar, PAN or passport
- Address proof
- Statement of holdings for the assets being pledged
- Demat account details, for shares and bonds
- Policy documents, for loans against insurance
- Fixed deposit receipts, where applicable
- Bank account details for disbursal
Frequently Asked Questions
Can I borrow against a term plan?
No. Pure term plans have no surrender value because they accumulate nothing — they are pure protection. Only policies with an accumulated value, such as endowment, money back, whole life and ULIP contracts, can be pledged.
How much can I get?
Typically eighty to ninety per cent of the policy's surrender value, which is very different from the sum assured. On a policy only a few years old the surrender value is a small fraction of the premiums paid, so the available amount is often modest.
Does my life cover continue?
Yes, provided you keep paying the premiums. That is the main reason to borrow against the policy rather than surrender it — you keep the protection and the accumulated value while getting the liquidity.
What happens if I do not repay?
The outstanding loan and accrued interest are adjusted against the policy proceeds at maturity or at a claim. That means your nominee receives less, which is worth explaining to whoever the policy is meant to protect.
Should I just surrender the policy instead?
Almost never. Early surrender values are poor, you lose the cover permanently, and Section 80C deductions claimed in earlier years can be reversed and added back to your income. Borrowing against it keeps everything intact.
Want a shortlist instead of a catalogue?
Tell us the situation and an advisor comes back with two or three options that actually fit — and names what each one gives up.