Allahabad Bank has entered into a Memorandum of Understanding (MoU) with Kotak Mahindra Old Mutual Life Insurance.

The tie-up between the two parties is aimed to provide value-added services and financial security to the educational loan borrowers of Allahabad Bank.

Allahabad Bank's Chairman and Managing Director, K R Kamath said, "The association with Kotak Life Insurance will provide education loan borrowers of Allahabad Bank best-in-class products and services beyond the normal education loan."

Under this MoU, Kotak Life Insurance will offer a group credit life insurance plan to the education loan borrowers of Allahabad bank in order to provide them coverage against any eventuality during the loan tenure.

The insurance cover will provide the facility of repayment of outstanding loan in case of a sudden demise of the borrower. It will prove relieving to the borrower's family as it eliminates the chances of family members being subject to loan recovery.

The provision of this group insurance coverage is expected to attract more people demanding for education loan.

Earlier also private sector insurance companies had come up with an innovative scheme where one can have a security of repayment of a home loan in case of a sudden death of the borrower.

A key player in both the Group Term Life and Individual Term Life businesses, Kotak Life Insurance has also announced reduction upto 40% in its term plan rates.