In policy loans, the amount that insurance companies lend to policy holders generally does not exceed 70% to 80% of the cash value.
If it is a guaranteed credit loan, it can be 20-40 times the premium, depending on the contract agreement of the insurance company.
Policy loan means that the insured mortgages his policy to the insurance company and obtains loan funds according to a certain proportion of the cash value of the policy. Policy loans are repaid once every six months. You can choose to repay the principal and interest in one lump sum, or you can choose to repay the interest only without repaying the principal. If the principal and interest are not repaid at maturity, the principal and the generated income will continue to be lent to you as new principal.
In addition, the policy loan does not affect the validity of the policy. If the insured has an insurance accident agreed in the contract during the policy loan period, the insurance company will pay compensation according to the contract.
How to borrow a policy loan
Policy loan, also known as policy, is a loan obtained by the policy holder from an insurance company with the policy as collateral. Policy holders can get policy loans because their policies have cash value. With the implementation of the balanced premium system, the premiums paid by the insured in whole life insurance at the initial stage of the policy are higher than their current expenditures, thus forming a certain cash value through year-on-year accumulation.
The main functions of policy loans:
1. Through the policy loan, the policy holder can alleviate the temporary financial shortage, and at the same time, his policy will not be invalid. Even if the principal and interest of the loan are not repaid, he can still get compensation if an event within the scope of insurance liability occurs. Moreover, the policy loan procedure is simple, and the borrower does not need any mortgage property such as credit certificate, as long as the policy has a certain cash value, it can be loaned.
2. Through the policy loan, the insurance company pays the insurance premium for the policy holder, so that the policy will not be invalid because of the failure to pay the insurance premium, or the policy holder will not choose the way of obtaining the termination fee through surrender when he can obtain funds through the policy loan to meet other capital needs. In this sense, policy loans are conducive to maintaining the efficiency of insurance companies' policies.
3. If the market interest rate rises, the policy loan increases, the cash expenditure of the insurance company increases, and the funds invested in other assets will decrease accordingly. In more serious cases, if there are too many policy loans, the insurance company may be forced to sell some assets under unfavorable circumstances to obtain cash to meet the policy loans, which will have a negative impact on the operation of the insurance company.
What are the requirements for policy loans?
There are certain conditions for policy loans, which usually require more than 2 years of insurance premiums. Only when the cash value of the policy reaches the agreed value can you apply for loans, which is subject to the requirements of the insurance company. The amount of policy loan applied by the insured is related to the cash value, which usually cannot exceed 70% to 80% of the cash value, and can be loaned for up to 6 months, and it is necessary to ensure that the insured can repay the loan on time. The actual situation is subject to the insurance clause.
Usually, the cash value is held by long-term insurance. Long-term insurance has a long payment period, a long guarantee period and a certain cash value. If it meets the requirements, in order to alleviate the financial pressure, it can be achieved through policy loans. Short-term insurance products, especially one-year insurance products, usually have no cash value and cannot be insured for loans.
Policy loan is a loan obtained from an insurance company with the cash value of life insurance policy as the guarantee. The one-time loanable amount of such loans depends on the effective year of the policy; The age of the insured and the amount of compensation for death when the policy is issued.
base type
Short-term accident insurance and health insurance, because there is no cash value, or the cash value is very low, such policies can not be used for policy loans. Although cash value is an important factor in evaluating whether a policy can be loaned, it is not only the policy with high cash value that can be loaned. The most typical example is linked insurance.
As an insurance with investment function, investment-linked insurance with a premium of more than 100,000 yuan is not uncommon, and it will soon accumulate considerable cash value. "Although investment-linked insurance has cash value, it is impossible to make a policy loan because the value fluctuates with the price of the investment unit."
Fixed interest rate
Lenders are most concerned about the amount, time and interest rate. Similar to general pledge, the reference index of policy loan amount is the "cash value" of the policy. According to the regulations, the policy loan ceiling is calculated according to a certain proportion of the cash value of the policy, and each company is different.
For example, the regulations of Pacific, China Life and Taiping Life are 80%; AIA and Allianz are 70%. A related person from Allianz told the Financial Weekly reporter: "Since the specifications of policy loans are formulated by the China Insurance Regulatory Commission, there is not much difference among major insurance companies."
The policy loan time is short, generally 6 months. There are also companies that can automatically renew their loans after maturity.
Repayment type
When repaying, customers can choose to repay in full or in part at one time. If the customer fails to repay the loan and loan interest when the loan expires, the owed policy loan and accumulated loan interest constitute a new policy loan, and the interest is calculated according to the policy loan interest rate on the next day of the maturity date.
If the customer partially repays the loan, the repayment will be used to repay the accumulated interest first, and then to repay the loan principal. If the borrower fails to perform the debt at maturity, the insurance contract will be terminated when the loan principal and interest are lower than a certain proportion of the cash value of the policy.
How to use the policy loan, and how much can I borrow?
Policy loans, how much money can be borrowed mainly depends on the cash value of our policy. At present, the amount of policy loans is usually 70% or 80% of the cash value. The higher the cash value, the higher the loan amount.
Policy loan, generally speaking, is to mortgage our policy to the insurance company and borrow some money. But not all policies can be used as collateral for policy loans. Because generally speaking, our loan amount is determined according to the percentage of cash value, and policies without cash value are generally unable to lend.
Generally, long-term insurance with high cash value can be used for policy loans, such as whole life insurance, or critical illness insurance and annuity insurance with long guarantee period. The specific situation still depends on the insurance clauses corresponding to the products.
Extended data
The object of insurance policy pledge refers to the object to which the insurance policy pledge points. Although the pledge of insurance policy seems to take the insurance policy as the pledge target in name, in fact, it does not take all the rights contained in the insurance policy as the pledge target. It is meaningful to set up a pledge only on the rights of the holder and the rights with property content, otherwise even all the rights can be set up as a pledge;
However, due to the restriction of the insurance contract on the identity of the obligee, it is actually useless for the pledgee to pledge his rights that cannot effectively satisfy his creditor's rights. This shows that for policy pledge, the pledged subject matter is not all the rights of the holder, but only a small part of it.
Regular policy loans refer to policies with cash value. Generally speaking, the policy loan requires the borrower not to be overdue for more than 90 days, not to be overdue for more than 20 times, and not to be overdue at present. During the loan period, the insured still needs to pay the premium on schedule to maintain the validity of the insurance contract during the loan period.
The general policy value is not particularly high, and the policy loan amount can be limited. Not suitable for long-term loans, but sometimes it can come in handy in an emergency.