- Offers instant loan upto Rs. 1 lakh against the policy, through a fully digital process on the insurer’s MyDigiAccount portal
- Interest rates are competitive with minimal documentation
Bhubaneswar: Tata AIA Life Insurance (Tata AIA), one of India’s leading insurance companies, has launched a disruptive service proposition for its consumers. Those policyholders looking for emergency funds can avail an instant loan of up to Rs. 1 lakh from their insurance policy without losing any coverage. The loan amount is credited to the consumer’s account within 1 minute via the insurer’s state-of-the-art MyDigiAccount portal. Since the launch, this digital-first initiative has already processed over 500 requests and disbursed around Rs. 5.5 crores, streamlining liquidity solutions for policyholders.
The facility allows consumers to borrow against the surrender value of select life insurance policies, ensuring they can quickly access funds with minimal paperwork and competitive rates. Policyholders can borrow an amount of up to Rs.1 lakh without providing collateral or going through a credit check at an interest rate of 10.80% per annum, much lower than the prevailing rate for personal loans. The streamlined process allows consumers to receive their funds within a minute of application, bypassing the delays of traditional loan approvals.
Speaking on this occasion, Sanjay Arora, Executive Vice President & Head of Operations of Tata AIA, said, “While the need for emergency funds can arise for anyone and at any time, none of us would want to compromise on our loved ones’ financial security. The Instant Loan Facility underscores our commitment to our consumers to enable them to be fikar-free in any situation, including exigencies, without having to surrender their policy. We are proud to be the first in the industry to offer a digital end-to-end processing system for loan payouts. This demonstrates our commitment to leveraging technology to deliver exceptional customer experiences and set new benchmarks in the insurance industry.”
Industry data indicates that many life insurance policies lapse every year. According to the annual report of IRDAI, during FY23, the benefits paid for surrenders/withdrawals increased by 26.52 % to Rs. 1.98 lakh crore. This number represents the number of life insurance policies surrendered during the period well in advance of their maturity. Among the possible reasons are the requirement of money in case of an emergency or a shortfall of financial resources. In such a case, policyholders can take a loan against their Tata AIA insurance policies. Loans are granted against the surrender value of traditional policies; Surrender Value refers to the amount policyholders will receive when terminating a policy before maturity.
The Loan Against Policy service circumvents the lengthy loan procurement process and has lower interest rates than a personal loan. Customers have the flexibility to repay the loan at their convenience, with any outstanding amount adjusted at the time of settlement of a claim. The service offers relief to those facing difficulties in securing loans due to cash flow disruptions. Unlike banks and NBFCs, Tata AIA does not check the credit scores of their policyholders or demand collateral.
