-
-
Call for help
-
Kindaruma Business Centre
Nairobi, Kenya
Loan against insurance policy
Loan Against Policy Request Guide
Learn how to properly request loan against policy with step-by-step instructions
Loan Against Policy
This is not a claim but a policy service or a feature offered on certain types of life insurance policies.
Definition: It allows the policyholder to borrow money from the insurance company using the cash value of their policy (e.g., a Whole Life or Endowment policy) as collateral.
How it works: The policy must have accumulated a significant cash value over time. The insurer will lend a percentage of this value (e.g., up to 90%) at a predefined interest rate.
Key Characteristics:
No Credit Check: Since the loan is secured by your policy's value, no lengthy credit checks are usually required.
Flexible Repayment: The policyholder can repay on a schedule or choose not to. However, unpaid loan amounts plus accrued interest will be deducted from the final death benefit or maturity value.
Risk: If the loan and interest exceed the cash value, the policy may lapse (be terminated), which could have tax consequences and leave the policyholder without coverage.
Borrowing against the cash value of a eligible life insurance policy.
How to Request a Policy Loan
-
Eligibility Check – Confirm your policy has accumulated cash value and allows for loans. This typically requires a permanent life insurance policy that has been in force for several years.
-
Application – Complete the policy loan request form provided by your insurer, specifying the amount you wish to borrow.
-
Documentation – Provide:
- Original policy document
- Completed loan application form
- Valid identification
- Recent proof of address -
Disbursement – Once approved, funds are typically disbursed within 7-14 business days. The loan amount plus accrued interest will be deducted from the death benefit or policy value if not repaid.
Important Note
Policy loans accrue interest, and if unpaid, can reduce the death benefit and potentially cause the policy to lapse if the outstanding loan plus interest exceeds the cash value.
Talk to our
insurance agent
+254 (774) 466-721
Call to Our Experts
