Can you use an insurance policy as collateral for a loan?

You can use a term or permanent life insurance policy as collateral for a loan, although more lenders may accept a permanent policy. Lenders typically only accept term plans as collateral that last at least as long as the loan term..

What should be the collateral value for education loan?

Collateral of suitable value is required for all education loans exceeding Rs. 7.5 Lakh. Tangible Assets – House, Apartment, Bungalow, Shop, Non-agricultural Land, Vehicle etc. Intangible Assets – Fixed Deposit, Life Insurance, Stocks etc.

Which clause is the important clause of life insurance policy?

The revival clause acts as a win-win situation for the insurance company and the policyholder. If the life insurance policy lapses due to the non-payment of the premium amount, the revival clause allows the reinstatement of the policy.

What is the Incontestability clause in life insurance?

An incontestability clause in most life insurance policies prevents the provider from voiding coverage due to a misstatement by the insured after a specific amount of time has passed.

Do you have to pay back loans on life insurance?

Unlike bank loans or mortgages, you do not have to pay back the loan you take when borrowing from a permanent life insurance policy. But when you borrow the money based on your cash value, the amount you borrow may reduce the death benefit from your policy’s life insurance portion.

Can I get an education loan with an LIC policy as collateral?

You can get an education loan with an LIC policy as collateral with the condition that only the surrender value or a matured policy can be used as valid collateral for an education loan. If these collateral assets are not available then you could also try for non-collateral loans from many private banks or NBFCs.

Can a life insurance policy be used as collateral for a loan?

Some lenders will not guarantee a loan unless a life insurance policy with a collateral assignment is issued. Alternately, the policy owner’s access to the cash value is restricted to protect the collateral.

Can I take an education loan against my insurance policy?

You wish to take education loan against your insurance policy hence insurance company will treat this loan as loan against assignment of insurance policy. Such a loan can not be termed as educational loan though the purpose for which loan amount is utilised is education.

What is the non-collateral education loan process?

As there is no collateral security involved in the non-collateral education loan process, lenders, especially the NBFCs, pay close attention to the universities into which the students have been accepted. This is why NBFCs and private banks maintain a list of universities and countries which are approved for an education loan by them.