Tata AIA Life Insurance introduces instant Rs 1 lakh loan service, policyholders to get funds in just 1 minute

Private life insurer Tata AIA Life Insurance (Tata AIA) has floated an instant loan service for its policyholders. Under the service, policyholders can access emergency funds through the instant loan facility. The service will enable customers to borrow 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. This service is designed to provide immediate financial relief with minimal paperwork and competitive interest rates. 

Since the launch, this digital-first initiative has already processed over 500 requests and disbursed around Rs. 5.5 crore, streamlining liquidity solutions for policyholders. 

Policyholders can avail loans against the surrender value of select life insurance policies. They can borrow an amount of up to Rs.1 lakh without providing collateral or going through a credit check at an interest rate of 8.80% 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.

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 data 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. 

For such cases, 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.

"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,” said Sanjay Arora, Executive Vice President & Head of Operations of Tata AIA.

In April 2024, Tata AIA Life Insurance said it has crossed Rs 1 lakh crore in assets under management (AUM). The company doubled its AUM from Rs 50,000 crore (August 2021) to Rs 1 lakh crore in less than three years. This increase has been aided by strong Individual New Business premium (IWNBP) income growth and superior investment performance.