I have a unit-linked insurance plan (Ulip) that I had bought in 2009. I have a family situation where I need to help my brother to pay his son’s college fees. Can I borrow against this policy? Will it be of the same value as the policy or will there be any deductions made? Is it advisable to do take a loan against the policy or should I take an education loan on my brother’s behalf?
—Ramesh Pawar
Ulips that are issued now do not offer a loan facility. However, as your plan was issued in 2009, it is possible that your policy may have a loan feature. You could check with your insurance company about this facility, its rates and availability. Typically, insurers offer 50-70% of the current fund value as loan, depending on the equity-debt exposure.
The general interest rate charged by insurers is in the range of 9-15%.
