Many people are not aware of the possibility of getting a loan from their insurance company. If you are on those ‘many’, now you know. It is possible to get a loan from your insurance company. Wondering how that is possible? You need not worry. You are on the right page for information. In this article, we will discuss explicitly how to get loan from your insurance company. Also, we will explain other key concepts that are in relation to the subject.
How can I get a loan from my insurance company?
Here is the point, as we have said earlier, it is possible to get a loan from your insurance company. But, this is only possible when you have a life insurance policy. Although borrowing from your life insurance might be a means to get a quick loan, we believe there are certain things you need to know. It is important to note that you can only borrow against your whole life insurance or permanent policy. Also, at the end of the month your life insurance company will add interest at the end of the month whether you pay or not.
How does a life insurance loan work?
This type of loan is totally different from your regular bank loan. This is because it does not affect your credit. Also, you do not need to go through the approval stage since there is no need for credit checks.
The fact is, when you are borrowing on your policy you do not have to explain to anyone how you plan to use it. The decision of what you wish to spend it on is all your choice. Asides from all these, another beneficial thing is that this type of loan is not recognisable by tax regulating bodies. This means it is free from tax. However, you must note that you will still have to pay the loan back as at when due with the interest accrued. Although the interest rate is way lesser than that of traditional bank loans, and you do not need to pay monthly.
How do I repay my loan?
As we have stated earlier, the interest rate is minimal, and the repayment is flexible. That is, you are not mandated to repay back monthly. However, irrespective of this, you still have to pay back what you have loaned. Not only paying back, you must also ensure that you do this in a timely manner. If you do not, interest is added to your balance, and it keeps accruing whether you pay monthly or not. You will not want to find yourself in this situation. This is because the likelihood of exceeding the policy cash value which will cause your policy value to elapse is imminent.
Insurance companies in Nigeria, ensure that several repayment opportunities are provided for their clients. This is to ensure that the loan is fully repaid and to prevent laps. However, should the insured die, the insurance company will add up the loan amount and the interest rate. Then, they will deduct it from what the beneficiaries of the deceased are meant to collect from his or her death benefit.
Life insurance policy is a great way to get a loan from your insurance company. However, it is important to repay as at when due. This is to avoid reducing your death benefit or even paying more. If you would like to know more, you can contact your insurance company for more details.