NTUC Income allows a loan to be taken against our ILP plan. Other insurers do not allow this option. They insist that the policyholder should surrender the units, if they wish to withdraw cash.
Why?
Perhaps, the other insurer wish the policyholder to surrender, and to re-invest at a later date. The policyholder has to pay the spread of 5% again. It will cost 5% to the policyholder
NTUC Income's practice is more favourable to the policyholder. Here are the terms of our loan on ILP policy:
1. We allow a loan of up to 50% of the cash value.
2. We will ask the policyholder to make partial payment, if the loan reaches 70% of the cash value, so that there is always a 30% margin. The repayment can be done by partial surrender of the units.
3. Interest rate is at the same rate as for traditional policy, ie 5.5% per annum.
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