Getting a Loan Against Your Life Insurance Policy

Mika

VIP Contributor
Yes, you read this right. You can get a loan by using your policy as collateral. One of the interesting benefits offered by life insurance companies is the option to get a loan against your insurance policy. You can get upto 90 percent of the funds you have paid as premiums. Let say, you pay a premium of $100. In five years you have paid $500 to the insurance company as premiums. You are now eligible to get 90 percent of $500, or $450, as a loan. You do not need extra collateral to get a loan, you can use your own policy as collateral. In order to be eligible for the loan, you should have paid at least 2 premiums.

How to get a loan from a life insurance policy?

You can get a loan from your life insurance policy in two years, one, from financial institutions that offer loans against an insurance policy, two, from the insurance company itself.
 

Mataracy

VIP Contributor
This sounds very interesting. Though I do not know that there is something like this that ,those who insured their life can get in-return is much like this before. Because i thought may be all the premium paid can not be touch until when some thing happen. This is a good idea.
 

Bookwormlux

Valued Contributor
This is a really nice advantage of insurance, but I do not see it as a wise decision at all as so many people who take a loan usually do not have a plan to repay it and so using your insurance to serve as a collateral for taking a loan is not going to be a wise decision.
 

btaliat

VIP Contributor
I don't know if this works our in all countries and if it does, then it is nice avenue for one to use one stone to kill two birds. Though like the poster above me said, this may be risky in the sense that the insured may lose his benefit of he's unable to pay his debt.
 
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Mika

Mika

VIP Contributor
This is a really nice advantage of insurance, but I do not see it as a wise decision at all as so many people who take a loan usually do not have a plan to repay it and so using your insurance to serve as a collateral for taking a loan is not going to be a wise decision.
I do not know where you got this idea that "people who take a loan usually do not have a plan to repay it." Well, there are fraudulent people around us and they take loans and avoid paying them. But they cannot run because the bank will get them anyhow. When you are burrowing from insurance companies, you are actually borrowing your own money.
 

Mandy96

VIP Contributor
I think this is a very good idea from the insurance companies, if this is true? Then insurance is worth giving a try, most definitely a life insurance. But I am not sure all insurance companies offers loan opportunities like the you just analyzed in your post. I doubt it if insurance companies in Nigeria could ever offer something like this
 

Jamoflondon

Verified member
I think this is a good idea because this is my first time of hearing something like this. I never knew insurance companies do assist their clients with loans. If this is true then I think I just learnt another way insurance companies make their profits. I just hope that this kind loan support is rendered by all insurance companies
 

Jasmine

VIP Contributor
If you need emergency money and if you cannot get a loan from banks or private lenders, this is a good option. However, this is not recommended except in emergency situation because once you get a loan, you will not only have to pay interest but also premiums. Your expenses are double fold.
 

Chibson

VIP Contributor
This may actually seem sensible because there are some people that do not have collateral such as lands and other properties whenever they want to take any loan. I think it is greatly dependent on the kind of insurance policy you have with the insurance company and they kind of agreement you signed.
 

Jasmine

VIP Contributor
You can get a loan only against your life insurance policy. Both term life insurance and whole life insurance policies are eligible for loans. The loan requirements depend on companies. However, this type of loan is recommended only for emergency situation as you will have to continue to pay the interest on your loan and also premiums.
 

Augusta

VIP Contributor
Using your life insurance policy for a loan sounds great I will go this route if need be. I like it when there are different ways you can gain from a particular thing. So life insurance policy isn't just about the coverage you can borrow money from them as well.
 
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