Kathmandu : The life insurance companies have disbursed a total a loan of Rs. 57.69 billion till the second quarter of current fiscal year 2078/79. Compared to last year, such loans have increased by 22.41 percent this year. The policy loan was Rs. 47.12 billion last fiscal year 2077/78.
Such loan is issued against the collateral of original policy document. As per the Life Insurance Policy Directives 2078, a life insurance policy is supposed to be eligible for policy loan after the completion of three years from the date of policy commencement and the payment of three annual premiums.
There is a provision to obtain the loan at a maximum of ninety percent of the surrender value and at a minimum of Rs.1,000. The Insurance Board, regulatory authority, has been instructing the companies not to take more than the prevailing interest rate of commercial banks on such loans.
Nepal Life has disbursed the most loans of Rs. 21.67 billion to the insured. Similarly, the second largest Life Insurance Corporation Nepal(LICN) has invested Rs.15.64 billion. National Life has disbursed Rs. 6.95 billion against policy loan.
Asian Life, stands at fourth with policy loan of Rs. 3.31 billion. The Rastriya Beema Sansthan has witness an increase of such loans by 300 percent and disbursed Rs. 1.60 billion. Among older life insurance companies, Prime Life, Met Life and Surya Life have invested over Rs.1 billion.
Among the new life insurance companies, Union Life has disbursed policy loans Rs. 910 million in insurance policies. Among the life insurance companies, the least Reliable Nepal Life seems to have invested only Rs. 97.1 million by pledging insurance policies.