How To Get Loan Against LIC Policy?

What is a Loan Against LIC Policy?

A loan against LIC policy is a secured loan facility offered to policyholders by LIC of India, where the policy’s surrender value is used as collateral to borrow money. The policy’s surrender value is the amount of money policyholders will get if they decide to discontinue the plan before maturity. A loan against an LIC policy allows policyholders to borrow up to 90% of their policy’s surrender value, offering a quick, secured source of funds for emergencies without terminating coverage. If you are wondering how to get loan on LIC policy, you can either opt for an online method or an offline alternative.

How to Apply for Loan Against LIC Policy?

LIC of India offers two processes for taking a loan against LIC policy. Take a look:

Offline Process:

Step 1: Visit an LIC Branch: Locate the nearest LIC branch and request a loan application form.

Step 2: Fill and Submit Forms: Complete the form and attach all required documents.

Step 3: Verification: The branch will verify the details and process the application.

Step 4: Loan Approval: Once approved, the loan amount is credited to your account within 3-5 days.

Online Process:

Registered users can also opt for a seamless LIC loan against policy online application service:

Step 1: Log in to LIC’s Customer Portal:

Go to LIC’s official website. Under the "Online Services" tab, click on "Online Loan." Log in with your User ID and password or register for "Premier Services."

Step 2: Submit Your Loan Request:

Select the policy against which you want the loan. Enter details such as the loan amount, repayment options, and tenure. Upload the required documents and submit the application.

Step 3: Bank Account Linking:

Provide bank account details for direct credit of the loan amount.

What are the Documents Required for Getting A Loan Against LIC Policy?

Here’s a checklist of documents required for the loan application:

• Loan application forms (as per the policy type).

• Original policy bond.

• Assignment deed in favor of LIC.

• Valid ID proof, address proof, and income proof.

• NEFT mandate/bank account details.

Eligibility Criteria for Taking Loan Against LIC Policy

If you are planning to take a loan against your LIC policy, always make sure you meet the below conditions:

• The applicant should be at least 18 years old at the time of applying for the loan.

• The LIC policy must be active and should not be in lapsed status.

• Loans are usually available on eligible plans such as endowment plans or ULIPs.

• The sanctioned loan amount can be up to 90% of the policy’s surrender value.

Here is a list of some of the LIC policies that are eligible to be used as collateral for taking a loan against LIC policy:

• LIC Jeevan Labh

• LIC Single-Premium Endowment Plan

• LIC New Jeevan Anand

• LIC New Endowment Plan

• LIC Jeevan Rakshak

• LIC Limited Premium Endowment Plan

• LIC Jeevan Lakshya

How Much Loan Can I Get Against My LIC Policy?

The amount of loan depends on the surrender value of your policy. Lenders calculate the LTV (Loan-to-value) ratio based on this surrender value.

Let us understand this with the help of an example:

For example, if an active LIC policy has a surrender value of ₹1 lakh, the policyholder may get a loan amount of up to ₹90,000. On the other hand, if the same policy becomes paid-up, the eligible loan amount may reduce to around ₹80,000–₹85,000. Policyholders can use a loan on the LIC policy calculator to understand their loan amount. This calculator can be used the same way as a traditional LIC calculator available on the official website.

Key Details to Look for While Applying Loan on LIC Policy

Repayment: The loan must be repaid with interest, which is payable semi-annually. LIC may deduct unpaid principal or interest from the policy benefits.

Interest Rate: The interest rate is declared annually by LIC and typically starts at 9%.

Minimum Tenure: LIC loan can only be availed after the policy has been active for at least six months.

Types of LIC Policies Eligible for Loans

LIC has a variety of different insurance plans based on the needs of the customer such as providing life cover, helping a customer in saving, planning their retirement and even providing a solution in case of child education. Some of these plans are:

• LIC Whole Life Plans

• LIC Endowment plans

• LIC Money-back policies

• LIC Pension Plans

• LIC ULIP Plans (Unit Linked Insurance Plans)

Can We Take Loan Against LIC Policy Without Surrender Value?

No, only LIC policies that accumulate a surrender value are eligible for offering a loan facility.

Policies such as LIC term insurance plans offer only life cover without investment value and have no surrender value they can not be used as a collateral. So, if only you have a ULIP, money-back, endowment or any other above mentioned categories, you can take a loan against it without any effect on the payable benefits of your policy.

How to Repay Your Loan on LIC Policy?

LIC of India offers various online methods to pay the loan against LIC policy, such as:

LIC Pay Direct

• No login required.

• Select "Loan Repayment" or "Loan Interest Payment" from the drop-down menu.

• Fill in the customer validation and loan particulars fields.

• Agree to the terms and make the payment.

Pay Through LIC Customer Portal

• Access the LIC portal through LIC login.

• Choose "Loan Repayment" or "Loan Interest Payment."

• Make the payment securely online.

LIC Policy Loan Interest Rate and Repayment Process

The interest on loans against LIC policies are much lower than most personal loans. It generally ranges between 8% and 12% per annum, depending on the policy terms and LIC guidelines.

The repayment process for a LIC policy loan is flexible. Policyholders are allowed to:

• Pay the interest regularly and repay the principal amount later

• Repay both principal and interest together as a lump sum

For those opting for loan on LIC policy online, timely interest payment is important. Unpaid interest may be deducted from the policy benefits or surrender value. In extreme cases, the policy may lapse if the outstanding amount exceeds the surrender value.

What are the Benefits of Availing a Loan From LIC?

Here are the reasons why should you opt for a loan against LIC policy:

• Lower Interest Rates: A loan against LIC policy usually has a lower interest rate than an unsecured personal loan, which means repayment becomes more economical.

• Quick Loan Approval: If you meet the eligibility criteria, the loan against LIC process is usually completed quickly with the loan amount being disbursed at a faster pace.

• Easy Online Facility: You can not only apply for a loan on LIC policy online but also can repay the loan amount through LIC's digital services.

• Policy Surrender Is Not Required: Taking a loan against LIC policy enables policyholders to keep on getting the insurance benefits, besides facilitating the fulfilment of the immediate financial requirements.

• Repayment in a Flexible Manner: With LIC, you get several different repayment options. One can either pay the interest at regular intervals only or can even pay off the entire loan amount later on.

Wrapping It Up

Taking a loan against LIC policy is one of the easiest ways to manage urgent financial requirements without affecting your long-term insurance benefits. You can apply through an LIC branch or use the loan on LIC policy online facility, making the process simple, quick, and convenient for eligible policyholders. By understanding the eligibility criteria, required documents, and repayment terms, you can smoothly learn how to get loan against LIC policy and access funds when needed. A LIC policy loan also allows you to retain your policy benefits while meeting short-term financial goals efficiently.

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