Policy pledge loan refers to a loan method in which the insured customer applies for financing funds from the bank with a life insurance policy with a certain cash value and no payment period as pledge without affecting his insurance rights. From the perspective of pledge, the policy is a kind of creditor's rights certificate, which is pledged by the policy, and its nature is creditor's rights pledge, that is, one creditor's rights is used to guarantee another creditor's rights. The pledge of life insurance policy is as liquid as other pledges such as national debt and certificates of deposit, and its risk coefficient is almost zero. Therefore, life insurance policy pledge loan is a relatively safe financing method. However, from the perspective of risk forms, the policy pledge loan may face some special risks besides the default risk, that is, the risk brought by the borrower's failure to repay the loan principal and interest as agreed in the contract at the expiration of the loan term. Therefore, it is necessary to explore the risk causes of policy pledge loans, so as to standardize the business of policy pledge loans and achieve a win-win situation for both banks and banks. The risks of policy pledge loans mainly come from the following aspects: First, the credit risks are mainly manifested in: 1. Subject qualification risk. Life insurance policy involves three subjects: the insured, the insured and the beneficiary. The ownership of its cash value belongs to the insured, and the insured has the right to terminate the insurance contract. Therefore, the borrower who pledges the life insurance policy must be consistent with the insured who pledges the policy. That is, only the insured can become the credit subject of the policy pledge loan. If the borrower does not have the above qualifications, it will inevitably lead to the invalidation of the bank loan rights. 2. The risk of the borrower changing the policy. According to the relevant provisions of the Insurance Law, the insured may request the insurance company to change its policy. During the policy pledge period, the borrower shall continue to fulfill the obligations of paying premiums in accordance with the insurance contract. If the borrower surrenders without the consent of the bank, or changes the information related to the loan in the policy, the cash value of the policy will be reduced or even lost, thus eroding the creditor's rights and interests of the bank. In addition, because the life insurance policy has the derivative function of automatically paying the premium and changing the cash value of the policy, once the insured fails to pay the premium on time, the insurance company will automatically pay the premium for the insured with the cash value accumulated in the policy, so as to keep the policy valid. The insured can also use the cash value accumulated in the policy as the premium, and change the original policy into a similar small policy or an extended policy, which will change the insurance period of the original policy and even endanger the value of the pledged subject matter, thus endangering the realization of the loan rights and interests. Second, the risk of the pledged subject matter According to the relevant provisions of the Insurance Law, the pledge policy for applying for loans must be true and effective and meet the pledge conditions. As a pledge, the life insurance policy must be insured for more than two years and the insured must pay for more than two years. That is, only when the insurance period and the payment period are met at the same time, the life insurance policy has cash value. In addition, a valid pledge policy must be a clean piece that meets the pledge conditions. The so-called clean part refers to the normal policy when the policy is pledged, and there is no record of borrowing from the insurance company. If no insurance policy expires and it is within the payment period, or it is resumed after handling the loss reporting formalities, the automatic premium payment clause shall be selected. In the policy pledge loan business, if the above conditions are flawed, it may lead to the lack of guarantee effect of the pledged policy, thus bringing risks to the bank's creditor's rights; Three. Legal Risk Life Insurance Policy Pledge Loan involves Contract Law, Insurance Law, Guarantee Law, General Principles of Loans and other relevant laws and regulations, and also involves many stakeholders. Once it violates the principle of fairness, it may affect the effectiveness of the contract and the adequacy and effectiveness of stakeholders' use of laws and regulations to protect their own interests, thus making loans potentially risky. To sum up, the main reason of policy risk is that the parties and related parties involved in the policy itself are quite complicated, which is very different from other pledged loans. Therefore, commercial banks should suit the remedy to the case and effectively prevent risks: First, strengthen loan investigation and audit, improve pledge setting procedures, and clarify risk prevention and control methods for policyholders. The main body of the loan should be clearly the applicant of the life insurance policy, and the identity of the applicant is a natural person. The identity consistency between the insured and the borrower is the fundamental premise to prevent credit risk; Second, strengthen the cooperation between banks and insurance companies, restrict or freeze some rights of the insured, so as to preserve the cash value of the policy. In order to protect the rights of the pledgee, it should be clearly stipulated in the loan contract that after the policy is pledged, the right of the insured to terminate the insurance contract and report the loss of the policy is restricted. When the applicant requests to terminate the insurance contract and report the loss of the policy, he should obtain the consent of the pledgee, that is, the commercial bank. Third, strictly examine the borrower's repayment ability and credit status to ensure the safety of credit funds. First, strict customer credit investigation procedures, fully investigate the first repayment source, analyze the borrower's credit status and repayment ability, and truthfully enter the customers who meet the loan conditions into the customer information systems of commercial banks and insurance companies; Second, strictly control the proportion of loans and prohibit excessive illegal lending; The fourth is to strictly review the pledged subject matter to ensure that the pledged policy is true and effective. First of all, we must strictly review the legal effect of the policy, mainly to review the authenticity of the pledged policy, such as whether the applicant is the borrower himself, whether the policy is within the payment period, and so on; Secondly, it is necessary to verify the cash value of the pledged policy, and ensure that the insurance period and payment period of the pledged policy are more than two years at the same time, and they are clean parts under normal conditions. Fifth, strengthen legal knowledge education and improve the legal and professional quality of employees. Bank-insurance cooperation involves the interests of commercial banks, insurance companies and policyholders (borrowers), and involves different legal provisions. Banks and insurance companies should cooperate sincerely on the principles of equality, voluntariness, fairness, honesty and credibility, and mutual benefit and win-win results. On the one hand, we should train employees, improve their legal quality and professional quality, communicate regularly and promote the formation of mutual understanding; On the one hand, when concluding a loan contract, the contract should fully reflect the interests of all parties, clarify the rights and obligations of all parties, and should not be beggar-thy-neighbor and unilaterally emphasize their own interests.
Further reading: How to buy insurance, which is good, and teach you how to avoid these "pits" of insurance.