Life Insurers Issued Rs. 50.77 Billion Policy Loan

Kathmandu: Life Insurance Companies have provided Rs 50.87 billion loan against the collateral of policy document. There are 19 life insurance companies in operation.

Nepal Life has provided the largest loan of Rs 19.18 billion on policy collateral. Similarly, LIC Nepal has disbursed Rs. 14.2 billion to the insured through policy collateral.

Among the old life insurance companies, National Life has issued Rs 6.7 billion, Asian Life at Rs 3.2 billion, Prime Life at Rs 1.47 billion, Surya Life at Rs 1.13 billion, Rastriya Bima Sansthan at Rs 1.3 billion and Met Life at Rs 980 million. 76 lakh and Gurans Life has disbursed a loan of Rs. 976 million.

Policy loan

Among the new life insurance companies, Union Life has disbursed the largest loan of Rs 821.5 million. Similarly, the least reliable Nepal Life has disbursed loan by pledging Rs. 526.3 million.

The old life insurance companies are in the forefront in disbursing loans on policy collateral. Insurance companies invest in various sectors by collecting premiums with the insured. In the process of investing in this way, they also provide loans to the insured. The insured accepts the insurance policy as collateral without pledging other collateral. As per the latest directive of Beema Samiti, regulator, such loan can be obtained only after the completion of two years of policy purchase and payment of two annual premium payment. However, in the case of a single premium payment policy, the loan can be obtained only after three years. The regulator has tightened the rules after it found issues in the sales of single premium policies.

How to get loan against insurance policy:

Such loans vary according to the nature of the insurance plan. Normally, when the insurance companies distribute the loan, the surrender value is calculated on the basis of the insurance fee paid by the insured and the loan is provided on the basis of the same assessment.

The insured must have paid two annual premium in order to be eligible to get loan by pledging the insurance policy. Further more only after the completion of two years of policy issue, the loan can be issued.

The insured will not be able to surrender the policy until he/she repays the loan taken from the insurance company. As per the provision specified by Beema Samiti, the insured can be eligible for a loan up to 90 percent of the surrender value.

In case the insured is unable to repay the loan, the insurance company will recover the loan by consficating the policy.   In case of death of the insured without paying the loan, the remaining amount after deduction of the principal and interest, is paid to the nominee.


The most attractive feature of the policy loan is that it doesn’t inherent the equal monthly installment(EMI). The loan can be repaid at any time within the maturity period. There is no minimum amount of principal payable, so the insured can pay any amount as per his/her comfort. The loan is available within 1 or 2 hours after submitting application to the insurer. The interest rate against policy loan ranges from 9 to 11 per cent. Interest is calculated semi annually. So, the insured is supposed to pay the interest semi annually  to avoid the compound interest.


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