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INSURANCE - Welfare/Education Loan
Monday, 25-Aug-2008

Insurance for Welfare / Education Loan is compulsory from 01 Oct 08 and premium will be deducted from loan amount..

The year wise break down of one time non-refundable contribution for Rs.10,000/- of Welfare / Education loan is appended below:

          Terms (in yrs)     Officers     Airmen/NCs (E)
               1                            24                            19
               2                            35                            28
               3                            46                            37
               4                            57                            46
               5                            68                            54
               6                            78                            62
               7                            88                            70
               8                            98                            78
               9                          107                            85
             10                          116                            93
             11                          125                          100
             12                          134                          107
             13                          142                          113
             14                          150                          120
             15                          158                          126

Note :   One time non-refundable contribution will be calculated for amount in multiples of
             ten thousand and will be charged on a yearly basis. Six months and above will be
             counted as one full year. Fraction of amount will be adjusted to nearest multiple of
             Rs 10,000/-.

              i.e. If an individual has been sanctioned a loan of Rs 4.27 lakh in 126 instalments
              (i.e. 10 years 6 months), non-refundable contribution will be charged for
              Rs 4.30 lakh in 132 instalments (i.e. 11 years). In case an individual takes a loan of
              Rs 4.23 lakh in 124 instalments (10 years 4 months) then the non-refundable
              contribution will be charged for Rs 4.20 lakh in 120 instalments (i.e.10 years).

The salient features of the Loan Insurance Policy are as follows:-

              (a)    The Scheme will be compulsory for all fresh loans sanctioned wef 01 Oct 08.

              (b)    One time non-refundable contribution towards loan insurance will
              be charged from loan amount at the time of disbursal.

              (c)    The non-refundable contribution will be calculated for amount in multiples of
              ten thousand and will be charged on a yearly basis as outlined above.

              (d)    The non-refundable contribution will be deducted from the loan amount being
              paid to the individual.

              (e)    In case a loanee wishes to foreclose the loan by lump sum refund or wishes to
              reduce the repayment period then the contribution paid will not be refunded.

              (f)    In case the existing loanee, i.e. loans sanctioned prior to 01 Oct 08, wishes to
              avail an additional loan then the non-refundable contribution for loan insurance will
              be charged on the outstanding loan plus additional loan sanctioned.

              (g)    In case an individual opts to repay the loan in certain number of instalments and
              then wishes to opt for longer duration of repayment then in such cases the difference
              in contribution will be charged from him along with the interest as per rate applicable
              for the higher number of instalments.

The non-refundable contribution so received will be retained in the Corpus for Welfare/
Education Loan of the Association. As and when death occurs of a loanee, the principal
outstanding as on at the end of the previous month of the month in which death occurs will
be adjustedfrom the subject account. No amount will be recovered from the death benefits
due from AFGIS or Public Fund if the principal remains insured. All existing cases of loan
paid prior to 01 Oct 08 will continue to be governed by the previous policy of recovering
from AFGIS and Public Fund.