Policy Loans

Some of AIA’s closed life insurance policies have a cash value which allows a loan to be taken out on the policy, effectively borrowing against the cash value. 

An arrears loan is an alternative to surrendering your policy if you no longer want to pay premiums. An arrears loan can allow you to preserve the benefits of your policy.  Your policy provides security for repayment of the arrears loan, including accrued interest and policy arrears which will be added to your loan balance. You are not required to repay this loan. However, it will be deducted from any surrender or claim against the policy. Please note that if at any time your loan balance exceeds the cash value of your policy, your policy will be cancelled. This means that you would also lose any life cover or other benefits of the policy. 

Some policies allowed customers to request a cash loan with the cash value of the policy providing security for the loan, including accrued interest. As of December 2021, new customer-initiated loans or top-ups to existing customer-initiated loans are no longer offered by AIA.

Similar to arrears loans, customers are not required to repay these loans, but can choose to do so. Any outstanding loan balance is deducted from any surrender or claim against the policy. Please note that if at any time the loan balance exceeds the cash value of the policy, the policy will be cancelled. This means that you would also lose any life cover or other benefits of the policy.  

Arrears loans and customer-initiated loans attract an interest rate. 

For former Sovereign traditional policies, the current interest rate is 7.0% per annum, which is compounded monthly and charged against loans, premium arrears and accrued interest on a traditional policy. 

For AIA Permanent Term and Universal Life products, the current interest rate is 7.0% per annum, which is compounded monthly and charged against loans, premium arrears and accrued interest. 

If you are unsure which interest rate applies to your arrears loan or customer-initiated loan, please contact us for assistance.  

If you have any questions regarding an arrears loan or customer-initiated loan, or would like information on our other products and services, please call your adviser or contact us.