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Application for Loan Against Insurance Policy

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Application for Loan / Assignment Forms

Form No. 5196 (Rev) - Application for First Loan in Respect of Policies Prior to 1-6-69

Date:

To,

The Sr. Divisional Manager,
Life Insurance Corporation of India

Dear Sir,

Re: Policy No.

Please grant me / us advance of Rs. or maximum available by way of loan against the above policy, on which I / We agree to pay interest at the rate of 10.5% per annum, compounding half yearly.

Address at which Loan Cheque should be sent:

I am / We are also agreeable to the following endorsement being placed on the policy, viz,

“ADVANCE(S) BY WAY OF LOAN WHEN GRANTED AGAINST THE SECURITY OF THE POLICY SHALL BE MADE BY THE CORPORATION ON THE FOLLOWING TERMS AND CONDITIONS”

(1) The Policy shall be assigned absolutely to and held by the ‘Corporation’, their successors and assignees as security for the repayment of the advance(s) and of the interest thereon and of all expenses which may be incurred in connection therewith.

(2) The advances shall NOT be paid within a period of six months from the date on which the relative loan settled.

(3) Interest on the advance(s) shall be paid compounding half-yearly to the ‘Corporation’...

(4) When called upon, repayment of the advance(s) with all interest which may be due thereon shall be made, being given three months notice to that effect.

(5) The Corporation, their successors and assignees shall not be bound to accept payment of any of the advance(s) unless tendered in full.

(6) In the event of failure to repay the advance(s) ... the Policy shall be held ... forfeited ...

(7) In case the policy shall mature or become a claim by death ... the Corporation shall be entitled to deduct such amount ...

The Policy duly assigned in your favour, the receipt for the loan amount and declaration regarding assignment duly completed are sent herewith.

Yours faithfully

(1)

Signature(s)

(2)

APPLICATION FOR LOAN AS UNDER WHERE THE POLICY ALREADY BEARS THE ENDORSEMENT OF TERMS AND CONDITIONS OF LOAN OR WHERE THE POLICY HAS BEEN ISSUED ON OR AFTER 1-6-1969

(1) Fresh loan where previous loan is subsisting.

(2) Further loan where previous loan granted at 6% or 7 ½ % or 9% is subsisting.

The Sr. Divisional Manager,
Life Insurance Corporation of India.

Date:

Dear Sir,

Re: Policy No.

(1) Please grant me / us an advance of Rs. (Rupees ) or maximum available by way of loan against above policy on which I / We agree to pay interest at the rate of 10.5% per annum payable every half year.

(2) I / am / We are aware of the terms and conditions on which the loan will be advanced.

I / am / We are also aware that said terms and conditions:-

* have already been endorsed on the Policy.

** will those as contained in the clause headed “Loans” appearing in the Conditions and Privileges printed in the Policy.

The receipt for the loan amount along with the assignment declaration slip is returned herewith duly completed.

*** The policy duly assigned in your favour is also endorsed.

Yours faithfully

(1)

(2)

Signature(s)

Form No 5200 - FORM OF RECIPT FOR THE LOAN ADVANCE

Rs. Place Dated

I / We (1) (2)

do hereby acknowledge receipt of an amount of Rs.

(Rupees

(in words) paid to me / us by the LIFE INSURANCE CORPORATION OF INDIA as an advance against the Policy No.

1. Assured

2. Assignee

3. Trustee

Revenue
Stamp Rs.1/-

DECLARATION TO BE COMPLETED WHEN BORROWER/S CANNOT READ ENGLISH

I hereby declare that the contents of the above APPLICATION FOR LOAN (Form No. 5196/5205) and the FORM OF RECEIPT FOR THE LOAN ADVANCE (Form No. 5200) have been translated and explained by me to

(1) and (2)

and further declare that he / she they fully understand(s) the meaning thereof.

Signature of the declarant:

INSTRUCTIONS :- If either or both the borrowers be non-English knowing or illiterate, an English knowing person should be requested to complete the above declarations...

NOTE OF AUTHORITY

Place Date

I/We hereby authorise the Life Insurance Corporation of India to pay the within mentioned loan amount of Rs. /out of within mentioned loan, a sum of Rs. to

Signature:

Signature:

and he/she/they has/have agreed to payment to be made to the party or parties authorised.

(Signature of the Declarant)

TO BE COMPLETED IN CASE OF MULTI PURPOSE POLICIES

Place

The Sr. Divisional Manager,
Life Insurance Corporation of India, Date

Re: Policy No.

Dear Sir,

With reference to my application for the loan to meet the premium and for private purpose under the above Policy which has been issued under the Corporation’s Multi Purpose Plan, I hereby agree that in the event of my death during the selected term of the Policy the Corporation may immediately on my death occuring, call for the repayment of the loan with interest there on ...

Yours faithfully

_____________________

_____________________ Assignee/s

_____________________ (Signature of Assured)

Form No. 5198 - FORM OF ASSIGNMENT OF THE POLICY BY THE POLICY HOLDER IN FAVOUR OF THE CORPORATION FOR THE PURPOSE OF LOAN AGAINST THE POLICY

I, the undersigned (full name) the life assured and under the within Policy of Assurance and the moneys thereby secured and all the benefits attached thereto to the Life Insurance Corporation of India, their successors and assignees absolutely for value received and which may be received hereafter.

Dated this day of (Signature of Assured)

Witness

Signature (Signature of Assignee)

Full name

Designation

Address

Certified that the contents of the above assignment were explained by me to the Assignor in Vernacular and that he/she affixed his/her signature/thumb impression thereto in my presence after thoroughly understanding the same.

(Signature of witness)

TO BE COMPLETED IN CASE OF ANTICIPATED ENDOWMENT POLICIES

Place

The Sr. Divisional Manager,
Life Insurance Corporation of India,
Date

Re : Policy No.

Dear Sir,

With reference to my application dated for a loan under the above Policy, which has been issued under with Profits Anticipated Endowement Assurance Scheme, I hereby agree that in the event of (1) my surviving years from the date of commencement of the Policy and (2) surviving years from the dated of commencement of the Policy...

Yours faithfully

__________________

__________________

__________________ Assignee/s (Signature of Assured)

Please detach it from here

INSTRUCTIONS

1. The form of Assignment on the reverse should be detached along the perforation and should be pasted over blank space on the back of the Policy and then completed...

2. The Assignor must affix his/her signature to the assignment in the presence of a witness...

3. Signature of any other matter written in vernacular should have the English translation thereof written beneath the same.

NOTE : In case of dispute in respect of interpretation of terms the English version shall stand valid.

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What the Application for Loan Against Insurance Policy Is

The Application for Loan Against Insurance Policy is a written request a policyowner submits to a life insurance company or lender to obtain a loan using an existing life insurance policy as collateral. It records borrower and policy details, loan amount requested, proposed repayment terms, and the policy's cash surrender or loan value. The form triggers an insurer review of policy status, collateral value, outstanding loans, and any beneficiary or assignment restrictions that affect lending. Completed applications form the contractual basis for the loan and related security interest.

Why a Proper Application Matters

A complete, accurate application clarifies the loan amount available against policy cash value, documents borrower intent and consent, and establishes terms useful for underwriting and audit. Proper execution supports enforceability under U.S. electronic signature law (ESIGN and UETA) and reduces underwriting delays.

Why a Proper Application Matters

Who typically prepares or completes this application

Multiple parties review and sign; clarity at submission speeds approval and reduces post-closing corrections.

  • Policyowner or borrower — provides identity, policy number, requested loan amount, and signature authorization.
  • Lender or loan officer — verifies collateral value, prepares loan schedule, and determines underwriting requirements.
  • Insurance company representative — confirms policy status, existing loans, and records assignment or collateral interest.

Primary signers and their roles

Policyowner

The individual who owns the insurance policy and requests the loan. Must provide government ID, exact legal name, and signature authority; mismatches can delay collateral perfection and processing.

Lender Representative

The loan officer or underwriting agent who accepts the application, confirms loan terms, and may countersign. Responsible for verifying the policy value, documenting consent, and ensuring required attachments are present.

Step-by-step: completing the application

Follow these sequential steps to prepare and submit a complete application and reduce underwriting friction.

  • 01
    Gather documents: Collect policy statement, ID, and recent valuation or account statements.
  • 02
    Confirm policy status: Verify policy is active and in good standing with insurer records.
  • 03
    Complete form fields: Enter accurate names, policy number, and loan amount in required format.
  • 04
    Sign and submit: Sign with required authentication and send to lender and insurer for processing.

How the application flows through the process

A concise view of the typical routing from submission to fund disbursement, showing who performs each step.

  • Submit Application: Policyowner or lender submits the completed application and supporting documents.
  • Insurer Review: Insurer confirms policy value, outstanding loans, and beneficiary or assignment restrictions.
  • Underwriting: Lender assesses collateral value, LTV, and borrower creditworthiness.
  • Disbursement: Loan is funded and security interest recorded or assignment executed as needed.

Digital workflow settings commonly used for this application

Recommended configuration elements for an e-submission workflow used by lenders and insurers.

Field Configuration
Authentication Email + SMS code or KBA for higher assurance
Signature Type Electronic signature with audit trail
Template Prebuilt template with conditional fields
Retention Automated retention with export to secure storage

Technology considerations for eSubmission and signing

Ensure the chosen provider supports ESIGN/UETA compliance, optional BAA for HIPAA workflows, and secure long-term storage.

  • Authentication: Email, SMS, KBA, or SSO options
  • Document formats: PDF, DOCX, and archived copies
  • Integrations: CRM and document storage connectors

Core sections and clauses to include in a professional application

A complete application combines identification, financial detail, collateral and legal clauses that define rights, obligations, and remedies for lender and borrower.

Identification

Full legal names, addresses, and government ID references to tie signatures to the correct legal parties and avoid mismatches during underwriting and perfection.

Policy Details

Insurer name, policy number, issue date, and policy type so the insurer and lender can locate and verify policy status and cash value.

Loan Terms

Requested amount, interest rate, repayment schedule, prepayment rights, and default provisions to set clear lending terms and repayment expectations.

Security Interest

Language granting a lien or assignment of the policy as collateral, including perfection steps and who bears filing costs.

Authorizations

Consents allowing the lender to obtain policy values, communicate with insurer, and record assignments; reduces downstream documentation requests.

Representations

Statements verifying policyowner authority, accuracy of the information, and absence of undisclosed encumbrances that could impair collateral value.

Essential data fields to include

Policy Number: Exact ID
Insurer Name: Carrier
Owner Name: Legal name
Requested Amount: Dollar value
Effective Date: MM/DD/YYYY
Signature: Signed and dated

Supporting documents commonly required with the application

Insurers and lenders typically ask for several attachments to verify identity, policy status, and valuation before clearing a loan against a policy.

Policy Illustration

Current policy illustration or statement showing cash surrender value and existing loans, which the lender uses to calculate available collateral and maximum loan amount.

Identification

Government-issued photo ID for the policyowner to verify identity and match the signer to the documented party.

Assignment Form

If required, a separate assignment or collateral pledge form executed by the policyowner to perfect the lender's security interest in the policy.

Payment Authorization

Bank routing information or payment authorization if the lender will auto-draft repayments or collect interest via ACH.

Comparison of common eSignature vendors for processing applications

Cost and core feature differences influence platform selection for document workflows; signNow is listed first per vendor comparison conventions.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by plan Varies by plan Varies by plan Varies by plan
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No envelope cap 100 envelopes/user/year Varies by plan Varies by plan Varies by plan

Timelines and typical processing expectations

Processing times depend on completeness, insurer responsiveness, and whether in-person or remote notarization is required.

Submission to Insurer:

Immediate on upload; insurer review typically begins within 1–3 business days.

Valuation and Underwriting:

Commonly 5–10 business days depending on insurer workload.

Notarization / RON:

If required, RON session may add 1–3 business days; in-person may add longer.

Final Approval:

Often within 7–14 business days for routine applications.

Funds Disbursement:

Typically within 1–5 business days after final approval and documentation.

Key milestones from application to loan funding

A staged view of major milestones with typical actions and timing at each step.

01

Application Submitted

Completed application and documents are delivered to lender and insurer.

02

Insurer Verification

Carrier confirms policy status and existing encumbrances.

03

Underwriting Decision

Lender approves terms or requests additional documentation.

04

Funding and Recording

Loan funds issued and assignment or lien recorded if required.

How a loan against a policy differs from a policy assignment

A short comparison to distinguish Loan Against Policy (collateralized loan) from a full or partial Assignment of Policy.

Criteria Loan Against Policy Assignment of Policy
Purpose borrow cash transfer policy control
Control of policy owner retains control assignee gains control
Repayment loan repaid to release lien no repayment — ownership change
Effect on beneficiary limited impact if lien released may change beneficiary rights

Common mistakes to avoid when preparing the application

  • Providing mismatched names or wrong policy numbers leads to processing delays and extra verification steps.
  • Failing to attach the latest policy illustration can result in incorrect loan amount calculations.
  • Using informal or incomplete signature methods without documented consent can create enforceability questions under ESIGN/UETA.
  • Not checking beneficiary or assignment restrictions may produce conflicts that delay approval or require amended documentation.

Risks and consequences of incorrect or incomplete applications

Loan Rejection: Application may be denied
Delayed Funding: Processing delays and lost opportunity
Collateral Dispute: Disputes over policy rights
Tax Consequences: Potential reporting issues
Increased Costs: Additional legal or amendment fees
Enforceability Risk: Signature defects may weaken claim

Real-world examples of eSigned insurance-collateral workflows

Two customer stories illustrate how electronic processes reduce friction when documenting loans against policies.

Tim Martin — Martin Properties

Tim used electronic forms for collateralized loans to close transactions remotely.

  • Quick integration with property workflows shortened turnaround.
  • He reported being able to process and execute all required documents online with compliance and security, improving efficiency for mobile and offline signing.

John Butler — Fertility Centers of Illinois

The organization standardized digital signatures for consent and collateral documents.

  • Integration reduced manual tracking and storage errors.
  • The team praised the responsive support and APIs that allowed automated routing and consistent recordkeeping.

Frequently asked questions about the application process

Answers to common questions about signatures, notarization, supporting documents, and reversing or amending an application.


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