How To Get Annuity Loan In Nigeria – Step By Step Guide

How To Get Annuity Loan In Nigeria - Step By Step Guide

How To Get Annuity Loan In Nigeria.

What is annuity

An annuity is a deal between a person and an insurance provider that calls for payments to be made to them by the insurer, either right away or in the future. Either a single payment or a succession of payments are required to purchase an annuity.

Annuities served the single function of turning a lump sum of capital into an ongoing stream of income for life or a predetermined length of time. They were created for those who were retiring or required a fixed, dependable monthly income in other circumstances.

There are several kinds of annuities available today that, in addition to offering a guaranteed income, can be used to invest in and build up capital.

Types of Annuity

Fixed, variable, and indexed annuities are the three fundamental kinds. Here’s how they function:

Fixed Annuity. 

Your insurance provider guarantees you a set quantity of recurring payments and a minimum rate of interest. Fixed annuities are regulated by State insurance commissions. 

Variable Annuity. 

In this situation, your financial institution allows you to receive annuity payments into a variety of investments, typically mutual funds. Your payout will differ based on your investment amount, your ROI, and outgoing costs. 

The Index Annuity

The benefits of both securities and insurance goods are combined in this annuity. The insurance provider rewards your account with a return based on an index of the stock market.

The index-linked annuity is impacted by external stock market factors; over a predetermined length of time, your money will earn interest based on any increases in an external index. You get a share of the gain if the index rises. Your contract value—including any income you may have previously earned—is unaffected if the index decreases.

Can I Borrow From My Annuity?

People take money from their annuities for a variety of reasons, including emergencies and project financing, but you should be ready to pay interest on the borrowed money as well as fees and potential penalties. In fact, borrowing from an annuity should only be done as a last option when in need of funds or when trying to come up with a down payment for any project.

Over time financial experts have revealed that what’s better than borrowing from your annuity is getting an annuity loan.

What is an Annuity Loan?

Annuity loans are specific kinds of loans in which the owner of an annuity borrows the money using the annuity contract’s worth as collateral. People may be able to obtain money without having to cash out their annuity, which could subject them to taxes and penalties.

In most cases, the borrower must send a request to the insurance provider that issued the annuity contract before the loan can be started. The borrower/annuity holder will receive a lump sum loan and will be required to make payments until the amount is paid off if the loan is approved. The majority of annuity providers permit annuity holders to borrow up to 50% of the annuity’s cash worth. Researching the choices is essential because the terms and conditions of each annuity provider vary.

Why Should I Get an Annuity Loan Against Borrowing from My Annuity

An annuity’s advantage is the security it can provide: consistent, guaranteed revenue throughout your retirement years. But there are a few problems with this investment. The biggest is the inability to withdraw money before the time frame agreed upon by both parties, without paying exorbitant fees and penalties.

An annuity loan has the advantage of letting the borrower escape these “exorbitant fees and penalties”. If a person starts an annuity contract and cancels it before a certain period of time has passed, they will be charged a surrender fee. In some cases, the gains the annuity holder has accumulated through the contract will be eliminated by these surrender costs. 

The benefit of an annuity loan is that the borrower can profit by avoiding exorbitant fees and penalties and also taxes and early distribution fees. 

Companies that offer annuity loans in Nigeria

Leadway Capital

Action Microfinance Bank

Custodian Life Assurance ltd

Stanbic IBTC

How to apply for annuity loans in Nigeria

visit the webpage of the investment or insurance firm.

To access Annuity Loans, scroll to the bottom of the screen and click on annuity loan options.

You might be required to provide your annuity’s current insurance number in order to be verified. Your policy number and authorized phone number should be entered.

Enter the credit amount, choose the loan term (in most cases annuity loans can span up to 36 months), and the purpose for the loan you’re requesting, then enter the bank verification number (BVN).

To view the repayment schedule, select View Repayment Schedule. If you are happy with the arrangements and payment schedule, click Proceed with Loan Request.

Click the Submit Loan Request button after that, and be on the lookout for an email at the address you provided when registering.

Examine your Inbox, Spam, or Junk folder for emails with attachments (Indicative Term Sheet for annuity loan). Print the attachment’s final sheet, sign it, and scan it before sending it to the financial institution.

The following documents will be sent to your email address after we receive the scanned term sheet: 

  1.  Loan Offer Letter
  2.  Amortization Schedule
  3.  Direct Debit Mandate Form
  4.  Loan Agreement
  5.  Letter of Monthly or other Periodic Deductions 

Print the Letter of Loan Offer, Direct Debit Mandate Document, and Letter of Monthly or Other Periodic Deductions.

Sign the documents as needed, then have your witness sign their part. After signing all necessary documents, scan and send them back to the firm’s provided email address. 

You can also take the original printed document to the loan provider’s office that is closest to you. Be sure your loan officer indicates that he/she has received the original copy of your documents stating the applicant’s name and Loan number for onward transmission to the firm.


Most investment and insurance firms that offer annuities also provide annuity loans to their clients, and it is often a good idea to seek annuity loans with your existing annuity provider. However, you can still get annuity loans independent of your annuity provider.