LifeCredit - policy loan
With over 90 million existing contracts, life insurance is still the most popular instrument for retirement plans in Germany. However, every other policy is canceled before maturity. This happens for various reasons: Being designed for private pension plans, endowment policies have an average duration of 28 years. But who can predict what will happen over such a long time? Personal circumstances change: Being made redundant, building a house or getting divorced - situations that may arise suddenly and require financial resources.Since 1999 consumers in Germany too have had the option of selling their policies to a third party on the so-called secondary market. However, if you decide to keep your policy and still want to extend your financial scope, a policy loan can be the best solution!
The policy loan works like a normal loan but is much cheaper than most bank and consumer loans.
- You keep your policy and remain fully covered
- Loans can be granted for any insurance company and any term to maturity
- Loans start from €5,000
- Either fixed or floating interest rate
- Value of your policy does not stagnate
- Loan terms between 12 and 120 months
- Unscheduled repayment possible
- No other collateral necessary
- Quick and simple approval and disbursement procedure
You have decided to request a non-binding, free quote from Life Bond for borrowing against your life insurance? No problem: Just a few easy steps and you are on your way!
Firstly, check and see if your policy matches Life Bond`s lending criteria:
- It is an endowment or pension insurance policy (including unit-linked policies) issued by a German insurance company
- The amount requested is at least €5,000
- The current surrender value amounts to at least €5,000 or, in case of a unit-linked insurance policy at least €8,400
- The remaining term of your policy is at least 12 months
- It is not an existing or former direct insurance policy from a company pension scheme
- The applicant has to be a private individual of at least 18 years of age residing in Germany
If this is the case, there are two ways to get a non-binding sample calculation for your policy loan:
- Send us the completed inquiry forms and we will draw up a sample calculation for you
- Use our online calculation tool in the German part of our website and get a quick and easy calculation for the loan you want. Of course you are free to print out your calculation or create a pdf document.
Team Policen Deutschland
Life Bond Lebensversicherungshandelsgesellschaft mbH
Münchner Str. 54 82069 Hohenschäftlarn
Example 1:
| Type of policy: | Endowment policy |
| Term to maturity: | 4/1/1995 - 4/1/2025 |
| current surrender value (including all surpluses accrued): | € 30,169.23 |
| Loan available: | between € 5,000 and € 30,169 |
| Client specifications: | The client requests a fixed interest rate and a term of 3 years |
| Net amount of loan: | € 30,000.00 | 35 installments of | € 138.30 | |
| Loan amount plus processing fees: | € 30,900.00 | 36th installment of | € 30,138.30 | |
| Fixed interest rate for agreed term: | € 4,078.80 | Nominal borrowing rate: | 4.46% | |
| One-time processing fee: | € 900.00 | Effective annual percentage rate: | 5.68% | |
| Total amount: | € 34,978.80 |
Example 2:
| Type of policy: | Pension insurance policy with lump-sum option |
| Term to maturity: | 8/1/1981 - 8/1/2017 |
| current surrender value (including all surpluses accrued): | € 96,564.50 |
| Loan available: | between € 5,000 and € 96,564.50 |
| Client specifications: | The client requests a loan of € 10,000 with a floating interest rate and a term to match the maturity of the policy*. |
| Net amount of loan: | €10,000.00 | 81 installments of | €35.42 | |
| Loan amount minus processing fees: | €9,800.00 | 82nd installment of | €10,035.42* | |
| Fixed interest rate for agreed term: | €2,904.44 | Nominal borrowing rate: | 4.25% | |
| One-time processing fee: | €200.00 | Effective annual percentage rate: | 4.69% | |
| Total amount: | €12,904.44 |
* When the policy matures, the loan can be repaid directly from the maturity proceeds.
Our policy loans are interes-only loans, so repayment only falls due when the policy matures. At the end of the term, the loan is repaid in one lump sum.
Have we aroused your interest?
Contact us.
To calculate your non-binding, free quote, we will need the following documents:
- A copy of the original policy including all endorsements (not the terms and conditions)
- A valid authorization, signed by the insured person (otherwise we are not allowed to request data from the insurance company!)
- The completed customer questionnaire
The forms are available at
Duration |
With a floating interest rate: |
With a fixed interes rate: |
||
| In months | Nominal interest rate | Effective annual percentage rate | Nominal interest rate | Effective annual percentage rate |
| 12 | 4,25% | 6,53% | -- | -- |
| 24 | 4,25% | 5,45% | 4,03% | 5,75% |
| 36 | 4,25% | 5,09% | 4,46% | 5,68% |
| 48 | 4,25% | 4,91% | 4,85% | 5,87% |
| 60 | 4,25% | 4,81% | 4,93% | 5,76% |
| 72 | 4,25% | 4,74% | 5,02% | 5,76% |
| 84 | 4,25% | 4,69% | 5,09% | 5,76% |
| 96 | 4,25% | 4,65% | -- | -- |
| 108 | 4,25% | 4,62% | -- | -- |
| 120 | 4,25% | 4,60% | -- | -- |
Your questions - our answers
What is a policy loan?
Originally, the term policy loan referred to an insurance company pre-paying the sum insured under a life insurance contract to the insured person. Since then, the term`s meaning has been extendet. Today, a policy loan can also mean borrowing against a policy, i.e. when policies are lodged as collateral for a loan.
What is LifeCredit?
LifeCredit ist Life Bond`s policy loan. Our cooperation partners are DSL Bank and SWK Bank. Our policy loans are interest-only loans, so repayment only falls due when the policy matures. At the end of the term, the principal is repaid in one lump sum or deducted from the maturity proceeds.
Is LifeCredit tied to a specific purpose?
No, you are free to use the money as you choose.
What is the maximum amount available as a LifeCredit policy loan?
The maximum loan amount depends on the surrender value and on the start date of your insurance contract. For contracts older than 12 years, you may borrow the full surrender value including 100% of all guaranteed surpluses accrued. Anticipated final surpluses cannot be accepted as collateral.
For contracts entered into less than 12 years ago, 100% of the guaranteed surrender value and up to 50% of surpluses accrued so far can normally be borrowed.
Is it possible to borrow against unit-linked life insurance policies?
Yes, but in this case, the maximum amount is lower.
Why is it not possible to borrow against the entire market value of my unit-linked policy?
The market value of a unit-linked life insurance policy usually fluctuates over the lifetime of the loan. As we need a reliable value for the collateral of the loan, we have to limit the available loan amount to a maximum of 60% of the unit-linked policy`s current market value.
Is it possible to borrow against several policies to increase the loan amount?
Yes, it is. With two or more policies it is even easier to reach the minimum surrender value of €5,000, or €8,400 for unit-linked policies.
Can I apply for LifeCredit with policies from every insurance company?
No. Currently, we can lend against policies from all insurance companies which participate in the Protektor AG guarantee fund. A list of member companies can be downloaded at: Protektor AG Homepage
Is it also possible to borrow against a policy into which my employer pays for me via direct insurance?
No, life insurance policies which are co-financed by the employer as part of the company pension scheme cannot be used. Only individuals, so-called natural persons, can apply for a policy loan. In the case of direct insurance, however, the policy holder is not a natural person, but the company where you are employed. Insurance linked to company pension schemes is subject to legal restrictions (section 2 subsection 2 BetrAVG - German Employers` Retirement Benefits Act). These so-called vested pension rights mean that an assignment is not possible. It makes no difference if the employee adopts the contract an is declared policy holder instead of the company.
Is it possible to borrow against foreign insurance policies?
No.
Is it possible to refinance another loan through LifeCredit?
Yes.
What happens with supplementary insurance during the term of borrowing (e.g. disability insurance)?
Supplementary insurance policies and the cover they provide remain valid.
What interest rate options do I have?
You can choose between a floating interest rate (based on 3-month Euribor) and a fixed interest rate.
What is the difference between the nominal interest rate and the effective annual percentage rate?
Nominal interest rate: The rate you pay annually
Effective annual percentage rate: This is an artificial interest rate, designed to describe the annual costs of a loan with reference to the whole loan amount (including fees). It enables comparison of different loans.
Nominal interest rate = interest rate without fees
Effective annual percentage rate = interest rate including fees (more meaningful and easier to compare)
What does the interest rate offered depend on?
The requested loan term and the amount borrowed.
What does the development of the floating interest rate depend on?
The development of 3-month EURIBOR. The interest rate is checked regularly and adapted to track 3-month EURIBOR. If the benchmark changes by more than 0.05 percentage points, the interest rate will be adapted by the same amount.
Is it possible to postpone the payment of premiums after taking out the loan?
Yes, this has no impact on your loan.
Are unscheduled payments possible?
Yes, they are. Section 489 of the German Civil Code (BGB) applies here too (see "Is it possible to cancel the loan prematurely?").
Do I have to pay an additional fee in the event of an unscheduled payment?
No, currently we do not have extra fees.
Is it possible to cancel the loan prematurely?
Yes, this is possible according to the legal provisions under section 189 of the German Civil Code. This section states that a borrower may partially or wholly cancel a loan with a fixed interest rate after a period of six months (after full disbursement of the loan), observing a notice period of three months. If the loan is based on a floating interest rate, the loan may be canceled at any time provided three months` notice is given.
Will the policy loan be reported to an registered at SCHUFA (credit bureau)?
This depends on the kind of loan you choose. DSL Bank makes use of SCHUFA information and registers the loan with SCHUFA. SWK BANK does not request a credit check from SCHUFA but only reports the loan.
How long will it take to disburse the loan?
After we receive all the application documents, you are usually given notice of the loan approval after 4-5 working days. The disbursement into your account will take place as soon as we receive a written confirmation of the surrender value and the assignment from the insurance company. This usually takes 2-3 weeks and depends on the insurance company`s quality of service.
What happens at the end of the borrowing period?
The loan can either be paid back of extended on current terms. If the policy loan lasts until the policy matures, the loan will be paid back from the maturity proceeds. The difference between the value at maturity an loan repayment will be credited to you.
Will a policy loan increase my tax liability?
We recommend seeking advice from your personal tax advisor.
What is cheaper - a policy loan or policy sale?
There is no single answer to this question, because it depends on your individual situation. However, selling a life insurance policy is only advisable if you are in urgent financial needs - meaning you require a larger amount of money as more than a temporary stop-gap. If you only need money on a short or medium-term basis we recommend taking out a policy loan. After all, the insurance contract remains valid during the loan term and so do the sum accumulated and your earnings. Ideally, at the end of the loan term, the repayment can be set off against the maturity proceeds, ensuring an easy repayment of your loan.
