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Loan Against ULIP Policy
Over the years, ULIP policies have gained recognition as an effective investment instrument that combines the elements of insurance and wealth creation. However, beyond their investment potential, these policies also offer an additional advantage by providing policyholders with the ability to avail loans against the accumulated value of their ULIP holdings.
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- Plan starting from ₹1,000/month
- Save upto ₹46,800 in Tax under section 80 C
- Zero LTCG Tax(Unlike 12.5% in Mutual Funds)
- In built life cover
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- Loan Against ULIP Policy
Let’s discuss the benefits as to why you should consider loan against ULIP policy.
What is a ULIP?
A ULIP is a unique financial product that combines the benefits of insurance and investment. It offers you the opportunity to grow your wealth while providing a life cover to protect your loved ones. ULIPs allow you to invest in various funds based on your risk appetite and financial goals, giving you the flexibility to choose between equity, debt, or balanced funds.
What are the Benefits of Availing a Loan Against ULIP Policy?
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Quick and Convenient: By opting for a loan against your ULIP policy, you can access funds quickly and conveniently, without going through the lengthy process of applying for a traditional loan. The loan amount is determined based on the surrender value of your policy, ensuring a smooth and seamless experience.
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No Need to Surrender Policy: Unlike traditional loans where you may be required to surrender your assets, a loan against your ULIP policy allows you to retain ownership of your investment. You can continue to benefit from the potential growth of your ULIP while utilizing the loan amount for your immediate financial needs. You can calculate the maturity value of your ULIP policy by using the SIP calculator available.
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Competitive Interest Rates: Companies offer competitive interest rates on loans against ULIP policies, ensuring that you have access to affordable financing options. This helps you manage your finances effectively while minimizing the burden of repayment.
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Flexibility in Repayment: Individuals have unique financial circumstances. Therefore, companies provide flexible repayment options for the loan against your ULIP policy. You can choose a repayment tenure that suits your needs, making it easier to repay the loan without straining your finances.
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No Prepayment Penalty: If you wish to repay the loan before the completion of the chosen tenure, companies usually do not impose any prepayment penalties. This allows you to clear your debts at your convenience and save on unnecessary interest payments.
Top ULIP Funds
Fund Name
AUM
NAV
Returns (in %)
3 Year
5 Year
10 Year
Whole Life Mid Cap Equity Fund
Tata AIA
AUM:13,041 Cr
13,041 Cr
NAV
155.97
-0.88%
Returns
24.07%
Top 200 Fund
Tata AIA
AUM:2,044 Cr
2,044 Cr
NAV
178
-1.55%
Returns
24.74%
High Growth Fund
Max Life
AUM:7,665 Cr
7,665 Cr
NAV
119.16
-0.77%
Returns
29.03%
Multiplier
Birla Sun Life
AUM:4,680 Cr
4,680 Cr
NAV
100.49
-0.58%
Returns
24.01%
Virtue II
PNB Metlife
AUM:3,473 Cr
3,473 Cr
NAV
79.02
-0.57%
Returns
22.28%
Fund Name
AUM
NAV
Returns (in %)
3 Year
5 Year
10 Year
Whole Life Stable Growth Fund
Max Life
AUM:256 Cr
256 Cr
NAV
60.88
-0.26%
Returns
13.13%
Balanced Fund
Max Life
AUM:367 Cr
367 Cr
NAV
48.16
-0.13%
Returns
13.48%
Growth Plus Fund
Max Life
AUM:591 Cr
591 Cr
NAV
37.08
-0.13%
Returns
13.79%
Save N Grow Money Fund
Max Life
AUM:70 Cr
70 Cr
NAV
58.68
-0.12%
Returns
10.4%
Creator
Max Life
AUM:541 Cr
541 Cr
NAV
100.45
-0.23%
Returns
10.51%
Fund Name
AUM
NAV
Returns (in %)
3 Year
5 Year
10 Year
Pure Fund
Max Life
AUM:575 Cr
575 Cr
NAV
54.02
-0.37%
Returns
16.86%
Builder
Max Life
AUM:243 Cr
243 Cr
NAV
89.11
-0.06%
Returns
7.43%
Whole Life Income Fund
Max Life
AUM:773 Cr
773 Cr
NAV
37.75
0.00%
Returns
5.89%
Conservative Fund
Max Life
AUM:235 Cr
235 Cr
NAV
54.81
-0.03%
Returns
7.17%
Protector
Max Life
AUM:304 Cr
304 Cr
NAV
63.69
-0.02%
Returns
6.28%
How to Apply for a Loan Against ULIP Policy
Applying for a loan against your ULIP policy is a simple and straightforward process:
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Check Eligibility: Ensure that you meet the eligibility criteria set by the company for availing a loan against your ULIP policy. The criteria typically include factors such as the surrender value of your policy, the tenure of the policy, and any outstanding premiums.
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Loan Amount Evaluation: Based on the surrender value of your ULIP policy, comapnies assess the maximum loan amount you can avail. This amount is generally a percentage of the surrender value, allowing you to retain a portion of your investments.
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Documentation: Complete the necessary documentation, including the loan application form and any supporting documents required by the insurer. These may include your ULIP policy documents, identity proof, address proof, and bank statements.
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Loan Disbursement: Once your application undergoes thorough review and receives approval, the loan amount will be disbursed promptly to your designated bank account. You can then utilize the funds for your intended purposes, whether it's for emergencies, education, home renovation, or any other financial needs.
Wrapping it up!
In conclusion, the Loan Against ULIP Policy offers a viable financial solution for individuals seeking immediate liquidity while maintaining the growth potential of their Unit Linked Insurance Plans (ULIPs). This financial product allows policyholders to leverage the accumulated value of their ULIPs to meet various financial obligations, whether it be for personal or business purposes.
FAQ's
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Can I continue with my ULIP policy while repaying the loan?
Yes, you can continue with your ULIP policy even while repaying the loan. However, the loan amount and interest will be deducted from the surrender value, and the policy's value may be impacted accordingly. -
What happens if I am unable to repay the loan against my ULIP policy?
If you are unable to repay the loan and the interest within the specified period, the insurance company has the right to recover the outstanding amount by deducting it from the surrender value of your ULIP policy. This may reduce the accumulated value of your policy. -
What is the maximum loan amount I can get against my ULIP policy?
The maximum loan amount you can get against your ULIP policy depends on the surrender value of your policy and the terms and conditions set by your insurance company. Generally, you can get a loan amount ranging from 40% to 90% of the surrender value. -
Are there any charges or fees associated with a loan against ULIP policy?
Yes, there are various ULIP charges associated with availing a loan against your ULIP policy. These charges can vary among insurance companies, so it is recommended to review the terms and conditions provided by your insurer. -
Can I claim tax benefits on the interest paid for a loan against ULIP policy?
Tax benefits on the interest paid for a loan against ULIP policy may not be available. ULIPs are subject to specific tax rules, and it is advisable to consult a tax advisor or refer to the latest tax regulations to understand the applicable provisions regarding loan interest and tax benefits.
*All savings are provided by the insurer as per the IRDAI approved insurance
plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
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