Depending on the policy terms the person gets profit amount as well. Like if its a participating Policy the bonus is attached with paid premium amount.
However, surrender value is only applicable on investment-cum-insurance policies because its originated from the investment of insurance policy holder like:
- Endowment plan
- Money back plan
- Unit-linked insurance plan(ULIPs)
Terms & Conditions:
- Not all policies are eligible for loan(Check if your insurance policy is valid for loans eligibility).
- One can avail loan on traditional policies except moneyback plans. Traditional policies is an avenue for financial stability & security. It has limited risk coverage but its suitable for tax planning. These plans ideally don’t permit premature withdrawal.
- If the premium was paid for minimum of 3 years.
- Interest rates depends on the terms which varies from company to company.
- Insurers have their criteria in fixing the interest rates. Banks don’t charge fixed rates unlike insurers. It depends on criteria like number of premium’s paid by the policy holder.