Since the launch, the digital-first initiative has already processed over 500 requests and disbursed around Rs. 5.5 crores, streamlining liquidity-solutions for policyholders
FinTech BizNews Service
Mumbai, 27 May 2024: Tata AIA Life Insurance (Tata AIA), one of India’s leading insurance companies, has launched
a disruptive service proposition for its consumers. Those policyholders looking for emergency funds can avail an
instant loan of up to Rs. 1 lakh from their insurance policy without losing any coverage. The loan amount is credited
to the consumer’s account within 1 minute via the insurer’s state-of-the-art MyDigiAccount portal. Since the launch,
this digital-first initiative has already processed over 500 requests and disbursed around Rs. 5.5 crores, streamlining
liquidity solutions for policyholders.
The facility allows consumers to borrow against the surrender value of select life insurance policies, ensuring they
can quickly access funds with minimal paperwork and competitive rates. Policyholders can borrow an amount of up
to Rs.1 lakh without providing collateral or going through a credit check at an interest rate of 10.80% per annum,
much lower than the prevailing rate for personal loans. The streamlined process allows consumers to receive their
funds within a minute of application, bypassing the delays of traditional loan approvals.
Speaking on this occasion, Sanjay Arora, Executive Vice President & Head of Operations of Tata AIA, said, "While the
need for emergency funds can arise for anyone and at any time, none of us would want to compromise on our loved
ones' financial security. The Instant Loan Facility underscores our commitment to our consumers to enable them to be
fikar-free in any situation, including exigencies, without having to surrender their policy. We are proud to be the first
in the industry to offer a digital end-to-end processing system for loan payouts. This demonstrates our commitment to
leveraging technology to deliver exceptional customer experiences and set new benchmarks in the insurance
industry.”
Industry data indicates that many life insurance policies lapse every year. According to the annual report of IRDAI,
during FY23, the benefits paid for surrenders/withdrawals increased by 26.52 % to Rs. 1.98 lakh crore. This number
represents the number of life insurance policies surrendered during the period well in advance of their maturity.
Among the possible reasons are the requirement of money in case of an emergency or a shortfall of financial
resources. In such a case, policyholders can take a loan against their Tata AIA insurance policies. Loans are granted
against the surrender value of traditional policies; Surrender Value refers to the amount policyholders will receive
when terminating a policy before maturity.
The Loan Against Policy service circumvents the lengthy loan procurement process and has lower interest rates than
a personal loan. Customers have the flexibility to repay the loan at their convenience, with any outstanding amount
adjusted at the time of settlement of a claim. The service offers relief to those facing difficulties in securing loans due
to cash flow disruptions. Unlike banks and NBFCs, Tata AIA does not check the credit scores of their policyholders or
demand collateral.
