A loan against an insurance policy allows a policyholder to borrow funds by pledging an eligible life insurance policy as collateral, typically a policy with an accumulated surrender value, such as an endowment or money-back policy. This option helps policyholders meet financial needs without surrendering the policy or letting it lapse, allowing the insurance cover and any accrued benefits to continue as per the policy terms. It is a secured loan where the rights under an eligible life insurance policy are assigned to the lender as collateral. How it helps meet financial needsPolicyholders often face situations requiring funds for medical costs, education, or other short-to-medium term needs, where surrendering a long-held insurance policy would mean losing accumulated benefits and cover. FAQsWhich insurance policies are eligible for a loan against insurance policy?