Generally, a Life Insurance cover is purchased to safeguard the family in the event of the untimely demise of the bread earner. However, today it is not just restricted to risk cover, but can also help you in securing a loan. You always have an option to secure a loan against your insurance policy. Let us see in the further article that “How Insurance Policy Can Fetch You a Loan“ in hours of need.

One Should Consider Loan against Insurance Policy
The advantage of a loan against insurance features fast approval and requires minimal documentation and has lower chances of rejection. Another attractive benefit is the interest rate, which is lower than any unsecured loan. This also comes handy for individuals having low credit score.

How to Apply For a Loan
The most important step is to go through your policy documents for details and find out what amount you are eligible for by asking your insurer.Once you complete the formalities, your loan will be assessed and your insurer will get in touch with you for transferring the rights to the lender. This usually takes 3 – 4 business days. Once the process is completed, you’ll get your loan money.

How to Check Your Policy’s Eligibility to Secure a Loan
Many lending institutes provide a loan against the surrender value of “Life Insurance in India“. There are some additional terms and conditions attached to your policies when it comes to avail a loan. For example, your policy acquires the minimum surrender value only if you have paid premiums for at least three years and can get a loan only after completing three years.

How Much Loan You Can Avail
You can avail up to 80-85% of the surrender value of traditional insured plans with guaranteed returns. The guaranteed value is the minimum eligible loan quantum that would be available to you and calculated as 30% of the total premium that you have paid, deducting the first premium whereas maximum value will depend upon the surrender value and the cash value of bonuses that you get. The maximum loan amount is usually decided by the actuarial of the insurance company. Some of ULIPs, which provide a loan facility, will offer money that depends on the current corpus value and the nature of fund in the plan. In a loan against insurance, the borrower’s income is a criterion for loan eligibility but the CIBIL score of the borrower will be considered.

Repayment of Loan
The maximum loan tenure offered is up to the tenure of the policy. The repayment period can either go on for the policy tenure or can have fixed number of years for repayment. Like traditional loans, these loans can also be pre-paid without any pre-payment penalty. In case you fail to repay your loan, then your policy will lapse.

Things You Should Keep In Mind
If you default on loan against insurance policy, your family will not get benefits of the policy cover. This is because the lender has the right to claim the maturity amount.

Providing a loan or loaning is an entrusting capital which is carry from one person to another. A loan has three elements the principal or the borrowed amount, rate of interest and tenure or period for which the loan is availed. It is one of the major economic properties of any bank or NBFC that is a Non-Banking Financial Company proposes.

There are several types of loans and the familiar categories of loans that people serve as:

• Home Loan
• Car Loan
• Education Loan
• Personal Loan
• Business Loan
• Gold Loan

These Junctures a bank mainly consider to Applying for any of these Loans

Bringing a loan is a huge economic judgment that compels you to create conscious options. Here are some options:


• Credit Score: When you will apply for loan, you have to review your credit history. The history of Credit score is a certificate of your last borrowings, if any, and reimbursement certificate. This will illustrate if you are accountable for repaying or if you have declined payments in history. A credit score of (750 and above) is great.

• The Interest Rate: Check the loan interest ratio before you apply for one. Loans that compel collateral security commonly have lower interest rates than loans that don’t require.

• The Processing Fee And Other Charges: When you try to apply for a loan, and if you lose your payment deadlines for your loan, you will be liable to spend a processing and punishment fee equally. These payments and taxes rely on the loan proportion.

• Research To Get The Best Rate For Your Loan: Research and compare from different banks & NBFCs to get the best interest rates, EMI, tenure, and other charges that best suit you.

Eligibility to have a Loan

• Salaried and Self-Employed persons can “Apply For a Loan“.

• The Age limit is from 23 years to 58 years for salaried and 28 years to 65 years for a self-employed person.

• The income should be Rs.25, 000 and yearly for salaried and minimum turnover of Rs.40 lakhs for a self-employed person.

• The CIBIL Score should be Above 750 for both.

Documents for Loan Application

For both salaried and self-employed persons, these documents are mandated to apply for a loan

• Application form with photograph
• Identity and Residence proof
• Last six months bank statements
• Processing fee cheque
• Latest Salary Slip for salaried
• Proof of Business for self-employed
• Form 16 for Business Profile and Previous three years Income Tax returns (self and business)

How to apply for a loan?

Applying for a bank loan is easier than one would believe. However, before you pertain for one, you should be conscious of your economic circumstance, lent you will have to compensate the loan proportion later. With all the paperwork implicated and several eligibility standards, you first comprehend your necessity and if you believe it’s a favourable way out for you. In the festival of Lohri 2020, apply for a loan to have several benefits and make you a “Happy Lohri“.

In India, loan defaults and frauds are the major reason behind unpaid loans. Lenders believe lending is risk free when borrower have a good credit score and a regular income source but recent slowdown in economy, vanishing jobs and increased unemployment in the country has led to a rise in number of loan defaulters. The majorly popular loans in India are Home loan, loan against property, Gold loan, Used car loan, Machinery Loan, Business loan, Personal loan etc. These loans have been classified into two categories; one is secured loan and second is unsecured loan. There are “Some Reasons You Should Know Behind Loan Defaults“ such as delays in salaries, job loss and business turn down are some of the top reasons for debt defaults.

Delay in Salary: It is the most common reason behind 40% of the loan defaults in India. The salary delay is common whether you are in government job or private job. Therefore, borrower is no left with any other option of delayed payment of loan for more than a month affecting your credit report.

Job Loss: As the Indian economy has been slowing down after demonetization, the number of job losses has increased and in such a case, borrower is left with no money to repay his/her ongoing monthly installments.

Business Loan: Business is always unpredictable where nothing is sure and most of the business owners take a working capital loan for the smooth operation of their venture. In case of any loss or failure, the repayment of the loan becomes tough leading to loan default.

Frauds: It might sound unrealistic but fraud is one of the major reason of loan default because some people take loans with a pre-planned intention of not to repay it. It is difficult to qualify for a loan without having legal documents still some manage to do so. Some of them misguide the lender and get underground not to “Repay the Loan Amount“.

The defaults are most common in business loans and personal loans as they are unsecured, so in that case of fraud borrowers do not pledge collateral equivalent to the borrowed amount and later on they do not repay. The consequences related to loan defaults are additional charges and penalties, drop in credit score, less chances to qualify for future credit, loss of ownership of collateral with lots of stress and tension. When you are not able to repay the loan for more than 3 months, the lender will send you a legal notice if you do not take any considerable step. The court will provide you a time period to repay the amount but if you failed to utilize that time, then your collateral will be considered as non-performing asset.

In order to lessen the defaults in country, every lending institution needs to tighten their loan eligibility and have a thorough check on the borrower’s repayment history and job security. Moreover, in case of business loans, every lender needs to be more sure about the repayment before they lend.

Wishing a Happy New Year is the best way to close an eventful year and to introspect the year gone by and look forward at 2020 with optimistic approach. Year 2019 has been a volatile year with surprises ranging from the unnerving fluctuations in the price of gold and oil, a sharp fall in the rupee and the gradual implosion of taxes. However, in these unwelcomed circumstances, there have been “Some Financial Tips to Welcome the New Year“ by ShubhBank. Let us focus on such learnings to carry forward into 2020.

Goal-based approach to investing: if you don’t have any financial goals to reach then it is unlikely you will get anywhere. You should have approach towards investing in equities and bonds at random; it is unlikely that you will get too far in making wealth. It is always advisable to start your investment journey with your goals in mind. Outline your goals such as retirement, child’s education, vacations etc. Once you extrapolate the amount needed for these goals, you can create a core portfolio.

It is good to take some risks: A liquid fund will result in 6% annualized return which will come to be 4.50% after taxes. Forget about wealth creation because you cannot beat inflation; so you must take the risk of equities. When you have long term goals, you must look at equities as the preferred asset class.

A rupee saved is worth than rupee spent: The time when you spend the money, it is gone and so is its future value. If you save and invest the money in productive assets such as bonds and equities, it creates future value. With the passage of time, not only the principal amount but even returns generate the additional returns. There is an effective power of compounding in such cases. The goal of wealth creation remains extracting optimal savings out of your income.

No wealth creation with too much debt: Many people do not realize the consequences of large borrowings till they actually fall into debt trap. It not only puts burden on your cash flow but also reduces your potential and capacity to take financial risks. Some of the debts such as home loan or vehicle loan are inevitable but high cost debts such as outstanding credit card payments and personal loans are best kept at the minimum margin. The main concern of your financial planning should be repaying high cost debts first, if you have any of them.

Don’t panic about factors you cannot control: it is so natural to worry about the price hikes; return of same powers etc. but the fact is that you do not have any control over either. Being an investor, your focus must be on looking at existing risks and managing them. Most of the triggers are out of your control but the things that are in your control are stock selection and portfolio mix.

Hope, you may have a financially rewarding year with these tips. “Happy New Year 2020“!

Have you achieved your financial goals before the New Year knocks at your door? Everyone is gearing up to welcome the New Year with pomp and splendor, we would suggest you to spare some time to assess the year gone by, especially in terms of finances. It is not a difficult task as we are always there to help you get head start. Here we are presenting some financial moves that you must take, if you want to be financially sorted for the coming year.

Status of your financial goals: Have you charted out how far have you reached in terms of achieving the financial goals? We understand that some of your goals are long term, hence, would take long time to achieve but what about your short term goals? It is high time to review the status of your goals. It will help you to figure out what’s been working or what’s not. Moreover, this outlines can help you priorities your goals or set the new ones for the coming year.

Revise your budget: If you don’t have your budget in place, it is better to start working on where you have been spending and if your priorities are in place or not. You can also re-outlay your budget for the New Year to maximize savings.

Make a strategy to pay-off after evaluating your debts: Your financial health can be affected by too many debts. So what’s situation you are in, how much loan do you have to repay and credit card dues you have? Ask yourself about unnecessary and unexplained expenses that can be cut down. It’s time to take complete control of your finances, cut down on expenses and dedicate your income towards clearing debts and savings. If your credit report is messed up, get focused on repairing it as it is important for your financial future.

Re-balance your financial portfolio: You have to invest somewhere to face the emergency situations in life. It is must to re-balance your finances at least once a year and the end of the year is the best time to do so. You must re-balance your portfolio only if your financial objectives have not changed otherwise you may consider changing your asset allocation. Re-balancing gets your investment portfolio back to its original state.

Review your insurance policy: Change is the way of life. Getting an adequate “Insurance Policy“ can help you tide through unpredictable life and uncertainties thrown by it. It is advisable to review your insurance plans at least once a year to accommodate any changes. Changes may include from getting married/divorced to having a child to buying your dream house. As the magnitude of the change increases, you may consider increasing your insurance cover.

ShubhBank have got your back when it comes to financial assistance. Just click ShubhBank.com to start exploring whether you want to start your own business, to plan a long international holiday or invest in something that interests you.

These days, it is always significant for the bank or lender to be aware of how a borrower will repay the loan when it comes to Personal Loan. If you have been maintaining a good credit history by paying all the dues on time then it will increase your credibility as a borrower and boost your chances of loan approval. There are some other steps also that one can take into account to accelerate the loan approval. Here are the tested ways how to get instant approval on your “Personal Loan“ application mentioned below:

Meet the eligibility criteria: It is advisable to compare the eligibility requirements of different lenders before applying for a loan. Most of the lenders have a minimum age requirement of 21 years and maximum of 60 years. Moreover, banks also have different age requirements for salaried and self-employed individuals. The employment area and income criteria also vary from lender to lender. Make sure to meet all the requirements for a speedy approval.

Keep documentation handy: The main documents you will need to have are identity proof, age proof, address proof and income documents. These may include a Voter ID card, PAN card, Aadhaar card, driving license or utility bills such as electricity, phone or gas bill can serve this. Income documents comprises of three month pay slips and bank statement.

Do not skip the research: One of major setback in rejection is avoiding the enough research. Every lender offers different interest rate. Consider all the options, do not go with the first lender, you could miss out on better loan offers from other lender. Do check upon the processing fees and other applicable charges too. Compare all these factors before finalizing the loan.

Be careful about credit history: At the last but not least, lenders will definitely want to scrutinize your credit report. If your CIBIL score is anywhere less than the expected or if you have defaulted payments on your existing loans, it will decrease your chances to “Get a Quick Approval On Your Personal Loan“ request. It is always good maintain your finances in order. There are several platforms available on the internet where you can check your Credit Score for free. Make sure to review your report before opting for a loan, if there are any inaccuracies or errors, so they can be fixed on time.

It is suggested to look upon the loan amount requirement, whether you are borrowing for the long term or short term, always remember to borrow according to your repayment capability. It should be a wise decision to secure that much quantum which could be paid off easily. It is good to repay the borrowed amount without having to get into more debt. The equated monthly installment of your borrowed credit should not exceed 50% of your monthly income. Taking such pointers into consideration, you’re sure to speed up your loan processing. To explore exclusive deals on financial products, just click on ShubhBank.com.