December 29, 2025 - 5 min. read
A unit-linked insurance plan offers life insurance protection with market-linked investment opportunities. You can avail loans against the surrender value of the policy in times of emergency. This helps access the necessary funds without compromising your insurance cover or liquidating your long-term investments. The loan term is easy, and the interest rates are also reasonable.
What is ULIP?
A ULIP provides life insurance cover with an investment component under a single product. Your premium payment is split into two portions: one provides life insurance, and another portion is used for investing in market-linked instruments. Additionally, you have the flexibility to invest either in equity, debt, or a mix of both, depending on your requirements and risk appetite. ULIP provides the flexibility of fund switching, which means you can realign the funds as per your convenience and market trends. You can also take loans when needed against the surrender value; here, the policy itself acts as collateral.
How to get a loan against ULIP?
To avail a loan against ULIP plan, follow the steps listed below:
Step 1: Check eligibility
Check whether your ULIP policy is eligible for a loan as per the eligibility criteria set by the insurer. Check important factors such as completion of policy tenure, present surrender value, and status of premium payments.
Step 2: Assess the loan amount
This amount is calculated by the insurer on the basis of the surrender value associated with your policy. Generally, the amount borrowed is a percentage of your policy's said surrender value.
Step 3: Documentation process
The loan application form needs to be filled out properly. Necessary documents such as ULIP policy papers, identity proof, address proof, and details of registered bank accounts need to be submitted for loan processing.
Step 4: Loan approval and disbursement
Once the insurer approves your application, the loan amount is transferred to your bank account.
Benefits of getting a loan against ULIP
Getting a loan against ULIP offers various benefits, some of which are as follows:
Quick access to funds: You can access funds quickly when there is an immediate need for finance, without going through the lengthy process of availing a loan.
Loan against ULIPs: The loan amount is directly linked to the surrender value of the ULIP. Thus, the borrowing process is transparent.
Policy continuity: Even if you take a loan against ULIP, the policy stays active throughout the loan period
No need to surrender the policy: No need to surrender or liquidate the policy, thereby enabling you to avoid early withdrawal from long-term investment and savings plans.
Competitive interest rates: The interest rates are competitive compared to those of unsecured loans, thus reducing the cost of borrowing.
Flexible repayment terms: Flexible repayment options are available, with the facility to repay only the interest, principal along with interest, or decide on a suitable repayment term.
Benefits of early closing: If you do early closure of the loan, prepayment fees are not levied in many cases. This helps avoid additional charges, and you may get substantial interest savings
Conclusion
A loan against ULIP acts as a financial option during an emergency without compromising insurance protection or affecting the growth of your investment. This provides quick access to funds at competitive rates while maintaining continuity of policy and long-term goals of wealth building. The easy application process, transparent loan calculations based on surrender value, and flexible options for repayment make loans against ULIP a suitable option for many.
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