Life Policy

Loans are given up to 90% of the surrender value on the life policy of the borrower. Merits of life policies as collateral are:

• It is easy to find out their correct price.
• Banks has a lien on the amount of policy can be ascertained from the insolvent.
• The Tittle of the policy can be ascertained from the Insurance Company.

The Demerits are:

• If life policy is can celled due to some wrong information supplied to the Company, then the bank will not get any payment.
• Surrender value of the policy is uncertain.

A banker, therefore, must take care to ascertain whether or not the age of the assured is admitted. The policy should be properly assigned. Endowment policies should be preferred to whole life policies.