Policy Loans 

Purpose

In most cases, policy loans are offered by insurance companies at current capital market conditions. A redeemable life insurance or accident insurance policy held by the borrower serves as the loan collateral.

Prerequisites

To speed up the entry of the conditions and avoid errors you can define one or several condition tables.

Process Flow

Policy loans given can have the statuses offer and contract.

As for mortgage loans, managing policy loans involves recording the basic data that describes and classifies the loan as well as the individual contract conditions. In addition, you enter data about the insurance policy that serves as collateral for the loan.

  1. The contract offer function allows you to enter all the data, terms and conditions of a potential loan contract in the system as an offer, without creating a contract. Within one offer, you can create several offer variants with different conditions. The borrower can then choose the most suitable alternative. The conditions the borrower accepts form the basis for the contract.
  2. When the contract is concluded, you can convert the contract offer directly into a contract. At this stage, you can still make any necessary changes. A loan has contract status when the conditions agreed with the customer are final. If you convert a contract offer into a contract, the data you entered for the contract offer is transferred into the contract. If the collateral for the loan was not entered with the offer, you can enter the data for the insurance policy when you create the contract or when you transfer an offer to contract status. When you create a contract, you can branch directly to the function for creating collateral. Alternatively, you can assign an existing collateral item to the policy loan.
  3. In addition to the disbursement function for policy loans, you can use the same accounting and position management functions as for mortgage loans.