World Oral Health Day: How insurance can serve as collateral for secured loans?
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The importance of oral health cannot be overstated, as it not only affects our physical well-being but also our overall quality of life. World Oral Health Day is celebrated annually on March 20th to raise awareness about the importance of maintaining good oral health practices.
Access to quality dental care can be a challenge for many people, having insurance can make a huge difference in ensuring that individuals can receive the care they need.
One innovative way that insurance can benefit individuals is by serving as collateral for secured loans. This means that individuals can use their insurance policies as a guarantee for obtaining a loan from a financial institution. This can be particularly helpful for those who may not have traditional assets to offer as collateral, such as property or vehicles.
Also Read: Is poor oral hygiene associated with heart disease?
What is a secured loan?
A secured loan is a type of loan that is backed by collateral, which can be in the form of assets such as property, vehicles, or in this case, insurance policies. By using their insurance policies as collateral, individuals can secure a loan from a lender at a lower interest rate, as the risk to the lender is reduced.
What are the benefits of using insurance as collateral?
Using insurance as collateral for a loan can have several benefits for individuals, such as:
Lower interest rates: By offering insurance as collateral, individuals can secure a loan at a lower interest rate compared to unsecured loans, as the risk to the lender is lower.
Easier approval process: Securing a loan with insurance as collateral can make the approval process smoother, as it provides the lender with a tangible asset to secure the loan against.
Access to funds for dental care: With insurance serving as collateral, individuals can access funds to cover the cost of dental treatments and procedures that may not be covered by their insurance policy.
Rakesh Goyal, Director, Probus Insurance says, “Like loans to securities and mutual funds, policyholders can also use their insurance policy to take the loans. Taking out loans on insurance is a quick and hassle-free process. At the same time, one can get a high loan amount against the paid-up value of the loan. However, one should ensure that there are strict rules for repayment, so one should understand all the terms properly before going into this issue.”
Also Read: What’s the difference between secured and unsecured personal loans? MintGenie explains
How to use insurance as collateral for a secured loan?
To use insurance as collateral for a secured loan, individuals should first contact their insurance provider to obtain a certificate of insurance that can be presented to the lender. The insurance policy must have a cash value or surrender value that can be used as collateral for the loan.
Once the necessary documentation is in place, individuals can approach a financial institution to apply for a secured loan, providing the required documents and information about their insurance policy.
Also Read: Dental treatment is costly. Here’s how you can finance it
In conclusion, insurance can serve as a valuable asset for individuals seeking to obtain a secured loan for various purposes, including dental care. By leveraging their insurance policies as collateral, individuals can access funds at a lower interest rate and with a smoother approval process.
This innovative approach highlights the importance of insurance in providing financial security and flexibility for individuals, especially when it comes to maintaining good oral health.
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Published: 20 Mar 2024, 09:57 AM IST
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