Loan on PLI and RPLI Policies

Loan on PLI and RPLI Policies

1.                  Eligibility

a)    Loan may be granted on the security of policies other than Anticipated Endowment   Assurance , Ten year Rural PLI and Children policies issued under these rules. Such loans may be granted on the security of a Whole Life policy, if it has been in force for at least four years, and is otherwise unencumbered. The maximum admissible amount of loan will be 90% of surrender value of the policy which will be subject to the condition that amount of loan should not become less than  Rs. 1000/-.

b)       Loan may also be granted on the security of an Endowment Assurance policy including Joint Life Assurance, if it has been in force for at least three years. The maximum admissible amount of loan will be 90% of surrender value of the policy which will be subject to the condition that amount of loan should not become less than Rs. 1000/-.

c)        The following policies of PLI and RPLI are eligible for the loan after specific time period and some policies are not eligible for loan:-

PLI/RPLI	Policy Type	Policy Name	Eligible for Loan	Policy Age Caveat
PLI	Suraksha	Whole Life Assurance	Y	Premium payment of 4 yrs. At least
PLI	Santosh	Endowment Assurance	Y	Premium payment of 3 yrs. At least
PLI	Suvidha	Convertible Whole Life Assurance	Y	Premium payment of 4 yrs. At least
PLI	Sumangal	Anticipated Endowment Assurance	N	NA
PLI	Child Policy	Child Policy	N	NA
PLI	Yugal Suraksha	Joint Life Assurance	Y	Premium payment of 3 yrs. At least
RPLI	Gram Suraksha	Whole Life Assurance	Y	Premium payment of 4 yrs. At least
RPLI	Gram Santosh	Endowment Assurance	Y	Premium payment of 3 yrs. At least
RPLI	Gram Suvidha	Convertible Whole Life Assurance	Y	Premium payment of 4 yrs. At least
RPLI	Gram Sumangal	Anticipated Endowment Assurance	N	NA
RPLI	Child policy	Child policy	N	NA
RPLI	Gram Priya	Anticipated Endowment Assurance	N	NA

2.               Amount of Loan

 

           The following are the Policy type ( PLI and RPLI)  specific conditions for loan as a percentage of Surrender Value:

Policy Name	Policy Type	Currency of Policy	Percentage of surrender value admissible
Whole Life Assurance (WLA)	Suraksha and Gram Suraksha	More than 4 years to 7 years	60%
		More than 7 years to 12 years	80%
		More than 12 years	90%
i)    Endowment Assurance(EA) ii)   Convertible Whole Life Assurance(CWLA) iii)Joint Life Assurance	iv)Santosh v)  Gram Santosh vi)Suvidha vii)          Gram Suvidha viii)        Yugal Suraksha	More than 3 years to 5 years	60%
		More than 5 years to 10 years	80%
		More than 10 years	90%

3.              Loan Quote

a)    Before applying the loan against your policy , request the postmaster to provide the loan quote generated through the system .

b)     This loan quote shows the loan amount admissible  in your policy.

c)   If you have already registered with customer portal of PLI, you can check the loan amount admissible in your policy online .

d)     You can also mail to postmaster to provide the loan quote on e-mail.

4.                 Documents

The documents required to submit along with the loan application form are:

a.      Policy Bond in an original.

a.      Premium receipt book (in case of cash policy)

b.      Loan repayment receipt book ( in case of second or subsequent loan)

c.     Disbursing officer’s certificate for last six months for deduction of premium (in case of pay recovery policy)

d.      Loan Application Form with assignment letter.  _

            i) Loan Application in PDF 

           ii)   Loan assignment in MS Word

          iii) Loan Application in MS Word

          iv) Loan Bond

5.                 Process :- Loan Application and Verification

The following will be process for loan :-

i)                    Application for loan in the prescribed form available at any Post Office shall be made to the Postmaster/ Manager of Central Processing Centre (GPO/ Head Office) along with the policy document, premium receipt book (in case of cash policy) and loan repayment receipt book (in case of second or subsequent loan) and disbursing officer's certificate for last six months for deduction of premia (in case of pay recovery policy).

ii)                The loan application form duly filled in and signed by the insurant, along with the policy document and other documents as mentioned above shall be handed over, against a receipt, to the Postmaster of any Post Office. The Postmaster concerned shall immediately forward all the papers to the Postmaster/ Manager of its Central Processing Centre (GPO/ Head Office).

iii)         The Postmaster/ Manager of Central Processing Centre (GPO/ Head Office) shall, on receipt of the application will  then check the eligibility and admissibility of the loan based on following criteria:

a.                 The documents submitted are verified.

b.                The policy should be free from encumbrances or assignments.

c.                  Calculate using Loan quote function the maximum loan amount   admissible.

iv)          After processing the loan and final approval,a copy of the sanction along with a loan bond with the relevant entries filled in shall be forwarded to the Postmaster concerned with instructions to pay the amount to the applicant after his executing the loan bond, which shall be returned by the Postmaster and kept with the policy and the application for loan in safe custody with the Postmaster/ Manager of Central Processing Centre (GPO/Head Office).

v)               The half-yearly interest due date will also be noted in the loan repayment book carefully by the Postmaster during the payment o the  loan.

vi)              The amount of loan sanctioned should be in complete multiples of  Rs.100/-

6.                 Loan Calculations and rate of interest

a)       Policy loan is calculated as a percentage of surrender value.

b)    Maximum loan amount applicable shall be 90% of surrender value          provided the policy age has exceeded 12 years.

c)     The Loan interest rate is 10%, subject to change in future.  Interest is  compounding  half-yearly.

d)    Example: Loan Interest Calculation:

                        Loan Interest Rate: 10 %

                        Loan Amount: Rs. 1000.

         The Amount of Interest Rs.50/- for 1^st half  yearly. ( once in a six months )  If loan payment date is 5th Jan than 1st due interest can be paid  between 6th Jan to 30th June and 2nd half yearly interest will be paid between 1st Jyly to 31st Dec. Principle amount fully  or partially amount can be paid any time.

e)  Interest on the loan will be charged from the actual date of payment  to insurant.

7.                  Repayment of loan

i)              The loan may be repaid at any time. It may also be paid in installments of amount not less than Rs. 100/-.  Interest will be charged @ 10% per annum compounding half yearly from the date of disbursement of loanand should be paid on or before the dates specified in the loan bond and loan repayment receipt book.

ii)              Interest for the half year will be charged on the amount outstanding on the first day of the half year, and any repayment made during that half year will be taken into account for calculation of interest only for the next half year. In the case of final repayment, interest will not be charged beyond the last date of the month in which the final repayment is made provided that interest had already been charged on the loan for at least six months.

iii)     The responsibility for payment of interest rests solely on the insurant. A notice regarding the amount to be paid as half yearly interest will be issued to the insurant only when there is a change in the amount payable as interest as a result of payment of a part of the principal. But the plea of non-receipt of such a notice cannot in any circumstances be accepted for non-payment of interest.

iv)         Insured person will be supplied a loan repayment receipt book by the Postmaster/ Manager of Central Processing Centre (GPO/ Head Office), through the Post Office concerned,, in which the Postmaster will  provide system generated receipt  each installment of amount paid in repayment of the loan.

v)                If the interest is not paid on the due date, it will be added to the outstanding amount of loan and usual interest charged thereon. In the event of any three defaults in the payment of half yearly interest, thePostmaster/ Manager of the Central Processing Centre (GPO/Head Office) will be entitled to surrender the policy and to apply the surrender value thereof in payment of the said loan and interest. The balance, if any, of such surrender value if adequate for a paid up value of Rs. 10,000/- shall be utilized for the issue of such a paid up policy; otherwise the amount will be paid in cash to policy holder entitled thereto.

vi)             In Case of  outstanding balance of the loan with interest will be recovered from the value of the policy at the time of settlement of the claim( Maturity/Surrender/Death). Interest on a loan will accrue up to the last date of the month in which the policy becomes a claim either by maturity or by surrender, provided that interest for at least six months had been charged on the loan.

vii)           Loan repayment can also be made through online portal.

8.                 Final Settlement of Loan

i)               The policy shall be released to the insured person or the party legally entitled thereto    after ensuring that the amount of loan and interest have been completely repaid.

ii)              In the event of loss of the loan repayment receipt book, the procedure laid down in POLI Rule 32 shall be followed. The policy against which loan is taken should always be assigned to the President.

iii)            Insurant can settle his loan finally any time after making final payment in any Post Office. After making the final payment , next day system will generate the final loan settlement letters.

iv)          Concerned Postmaster /CPC Incharge will send an intimation to insurant for this and intimate to collect his original policy bond.

v)            If the insured person wants to surrender the policy before repayment of the loan, he should apply to the CPC , with whom his policy is kept as security, to surrender the policy, adjust the surrender value thereof to the balance of loan and interest due and to pay him the balance, if any.

9.     You can also check you loan repayment amount with the help of  calculator,  however final amount will be as system generated:-

 Download loan repayment calculator.  

(For more detail  refer POLI Rule –2011)