What are the risks of using policy loans?

In recent years, with the rise of the financial industry, unsecured loans have attracted more and more attention. There are many forms of unsecured loans, and policy loans are one of them. Policy loans not only have fast capital turnover and high quota, but also borrowers can still enjoy policy rights during the insurance period. Although there are many benefits of policy loans, do you know that policy loans also have certain risks? Next, let's talk about the risks of policy loans.

Policy loans mainly have the following risks:

First, lending institutions are at risk.

As we all know, the policy benefits can only take effect on the premise that the insured, the insured and the beneficiary have signed a contract agreement, and the insurance benefits ultimately belong to the insured. Under certain conditions, the insured is still eligible to terminate the contract agreement, so generally speaking, the insured of the policy must be consistent with the borrower, otherwise it will be very unfavorable to the insurance company and the lending institution, and the final result will be that the lending institution will close down and the borrower will lose the loan right.

2. Risks of the insured or the borrower changing the policy temporarily.

According to the relevant national insurance laws, the insured has the right to ask the insurance company to change the policy or surrender. However, during the loan period, the borrower should also pay the insurance premium to the insurance company to ensure the rights and interests of the insurance company. Once the borrower changes the insurance policy or surrenders the insurance without the consent of the lending institution, the insured will lose the insurance interest and loan qualification.

Iii. Risk restrictions and applicable conditions of policy loans

Many users think that policy loans can be exchanged for liquidity unconditionally, but they are not. We all know that policies are time-limited. Therefore, the borrower's one-time loan amount is also based on the timeliness of the policy, and not all policies can lend. Only such policies that qualify for savings can take effect.

Because the policy is time-limited, the loan amount of the policy is only applicable to short-term liquidity, and it is not applicable to large and high-risk investment projects such as stocks and usury.

In short, although policy loans have many benefits, they also have certain risks, so borrowers, insurance companies and lending institutions need to be treated with caution. But you don't have to worry. For borrowers, the benefits of policy loans outweigh the risks. As long as you choose a formal professional lending institution and repay it regularly, there is basically no security problem.

Does the policy loan affect the insurance account? I want a detailed answer. thank you

After the policy loan, it has no effect on the effectiveness and income of the policy contract, but some situations need to be noted:

1. After the policy loan, it takes 6 months to pay off. Or the interest is calculated in the sixth month, which is regarded as a second loan;

2. Pay attention to timely repayment and premium renewal to avoid terminating the contract beyond the stipulated renewal period;

3. If an insurance accident occurs during the policy loan period, the policy still needs to bear the insurance liability. Such as medical expenses reimbursement, death compensation, major illness compensation, pension compensation, dividend compensation, etc.

4. Repayment of interest for the second time. If the loan cannot be repaid, it can be regarded as the second loan renewal, and the first unpaid amount+period interest = is regarded as the second loan;

5. If you can't repay the interest for the second and third time, you can continue to repay the interest, provided that the policy has cash value.

Extended data:

Policy loan is a loan obtained from an insurance company with the cash value of life insurance policy as the guarantee. The one-time loanable amount of such loans depends on the effective year of the policy; The age of the insured and the amount of compensation for death when the policy is issued.

The so-called policy loan refers to a loan method in which the insured mortgages the policy he holds to the insurance company and obtains funds according to a certain proportion of the cash value of the policy. Since the customer's insurance protection is not affected in the process of pledge loan, the policy is still valid.

What are the advantages and disadvantages of policy loans?

Advantages: 1 Safe and reliable. When the policy is valid, the customer can continue to enjoy the insurance protection stipulated in the policy during the loan period. Relatively speaking, the guarantor does not have to worry about losing protection because of surrender, which can avoid the loss of surrender fees. 2. The operation is simple, and the process of handling loans is very simple. The insured only needs to bring the insurance policy, ID card and the written statement that the insured agrees to the loan application to the insurance company. As long as the lender brings all the necessary information, under normal circumstances, the insurance company can complete the business on the same day. 3. The expected annualized interest rate is low. The expected annualized interest rate of insurance company policy loans is relatively low. In addition, the expected annualized interest rate of bank commercial loans with a term of 6 months or less can be fixed or variable. Variable means that the expected annualized interest rate of policy loans changes with the expected annualized interest rate of the market. This provision of expected annualized interest rate is beneficial to policyholders, beneficiaries and insurance companies. It can prevent the insured from obtaining products with higher investment returns from insurance companies when the expected annualized interest rate in the market is too high. It can also make insurance companies increase the interest earned by policy loans when the market expects the annualized interest rate to rise, and make up for their losses to some extent. Disadvantages: Although it is relatively simple to use policy loans, not all insurance products have this function. Moreover, the loan amount is calculated according to the cash value of the policy, not the insurance premium. 1. Not all policies can be loaned. The most common life insurance, dividend insurance and other insurance with the nature of savings. In addition to these products, common accident insurance, medical insurance and term life insurance do not have the loan function. In addition, some insurance products also stipulate that if there is insurance free of premium, prepaid premium or claim settlement, you can't lend. 2. The loan amount is not calculated according to the premium. The loan is based on the cash value of the policy, so the loan amount does not exceed 80% of the cash value of the policy at most. The difference is because the premium will accumulate into cash value after deducting various expenses, while the insurance cost of long-term life insurance products in previous years is relatively high. What is the worst result of not paying back the policy loan? Do you want to join the blacklist?

If the lender really does not pay the policy loan, it will not only face the problem of credit reporting, but also the lender's policy will be invalid and the lender's repayment agreement will still exist. If the repayment obligation is delayed, the lender may even be pushed to the dock. This situation is not uncommon.

Because the loan is actually the cash value of the policy, medical insurance, accident insurance and other products with short insurance period and low cash value cannot be loaned by the policy. Generally speaking, life insurance and long-term insurance such as dividends and annuities have high cash value, and they can all apply for loans.

During the loan period, the cash value of the lender may be frozen in disguise. As a result, the loan was issued, but the cash value of the policy was lost, which was equivalent to raising interest rates in disguise.

Extended data:

Shanghai Banking Insurance Regulatory Bureau once issued a risk warning saying: Choose carefully to apply for policy loans. Before applying for a policy loan, the applicant should make clear the business content and whether there is a loan demand. If you apply for a policy loan to buy wealth management products such as P2P, once the wealth management products default, the insured will face double financial losses.

An insurance company executive also pointed out in the exchange that high-risk investments, including stock trading, should not adopt policy loans. Policy loans rarely last more than half a year and are only suitable for short-term capital turnover. Borrowers should also remember to repay their loans regularly. If it is overdue or unpaid, the cash value of the policy will be deducted. Once the cash value of the policy is zero, the insurance contract is automatically terminated.