Many of the policies offered by the Life Insurance Corporation of India allow policyholders to raise requests for loans against the sum assured. This special feature helps LIC customers to take care of their liquidity needs for emergencies. To get a loan from LIC, policyholders are required to fulfill certain criteria and follow a standard procedure set forth by the company, as discussed in the next sections.Read more
Policyholders can avail of loans against their LIC cover when the policy acquires a surrender value. Mostly, a life insurance policy acquires a surrender value on paying two to three full years’ premiums. This surrender value amount is paid to the policyholder should they choose to cancel their policies before the end of the policy term.
Now, policyholders of such policies can get a loan from LIC up to a percentage of the surrender value acquired. For a majority of the policies that are in force, the maximum loan amount that can be availed is up to 90% of the surrender value. In the case of paid-up policies, it is up to 80% of the surrender value.
Policyholders are expected to repay the loan amount with the interest. LIC gives you the option to continue interest payments on a half-yearly basis while deducting the loan principal amount from the claim benefit payout.
LIC is liable to recover the outstanding amount and the interest payable from the claim proceeds at the maturity of the policy or on the death of the policyholder.
Loans can only be availed once the life insurance policy acquired a surrender value.
Not all policies offer this benefit. Such provisions are detailed in the policy brochures of those that offer a loan facility.
The rate of interest is declared by LIC every year and is further dependent on the policy type. Interest rates on policy loans at LIC usually start from around 9%.
LIC caps the minimum tenure during which a loan can be availed at is 6 months from the date of its issuance.
The interest on the loan is payable half-yearly.
Policyholders that have registered for premier services can register a request for a loan against their life insurance policy on LIC’s Customer Portal. Note that LIC only grants a loan to the life assured upon fulfilling the term and conditions mentioned in the policy bond.
Primary Requirements To Get a Loan From LIC
The loan application, agreeing to the terms and conditions of the loan under the policy in force
The policy against which the loan is being sanctioned should be assigned completely in favor of LIC
Receipt for the loan amount
Documents Required For a Loan Application
Loan forms - 5196, 5205, 5200, 3516, 5198, 3599 (as per the terms of your policy loan)
Original policy bond
Identification proof, address proof, income proof
Bank details/NEFT mandate
Eligibility Criteria to Avail LIC’s Loan Facility
The individual should be a policyholder of LIC’s insurance products
The policyholder should be a citizen of India
The policyholder should be a minimum of 18 years of age or above
The policy should have acquired surrender value
Policyholders can apply for loans either through offline channels or online through LIC’s e-portal. Note that online services can only be availed by the policyholders who have subscribed to ‘Premier Services’ on the company’s online customer portal.
Offline Loan Application at LIC
Visit your nearest LIC branch.
Request for the loan application form and fill it out.
Submit the required forms and documents as suggested by the advisor at the branch.
Upon verification, the loan amount shall be sanctioned in your name within 3-5 days.
Online Loan Application at LIC
Visit the official website of LIC.
Under the ‘Online Services’ tab, click on ‘Online Loan.’
Make an online loan request through the Customer Portal. Note that this is only applicable in the case of Premier Service Registered Customers.
This shall take you to an external site, wherein you have to sign in with your User ID, password, and Date of Birth.
You also have the option of signing up at this stage if you don’t have an account.
Choose the LIC policy against which you wish to avail of the loan facility.
Choose the loan amount, EMI payment options, interest payable, and the tenure of the loan.
Submit the requested documents and proceed to make the request.
Link your bank account for LIC to credit the loan amount directly to your account.
Steps for Online Loan Repayment/Interest Payment
When you click on the ‘Online Loan’ tab under ‘Online Services’, you are directed to the ‘Online Policy Loan Options’ page.
Under the Loan Repayment/ Loan Interest Payment section, you will see two options, viz. Pay Direct and Pay Through Customer Portal.
Pay Direct - On choosing this option, you don’t have to log in to an account.
From the drop-down menu, select either Loan Repayment or Loan Interest Payment.
Click on Proceed.
Fill in the requested details in the form fields for ‘Customer Validation’ and ‘Loan Particulars’.
Click on ‘I Agree’ and then ‘Submit’.
Make the requisite payment.
Pay Through Customer Portal - This option can be availed by those who have registered for premier services.
Sign in with your User ID and Password or create an account.
Choose Loan Repayment or Loan Interest Payment.
Make the payment.
LIC has made the loan application process much easier through its online service portal. Now you can repay your loan amount and pay interest in just a few clicks. These online services are completely free of cost and therefore, should be used by policyholders to avoid the hassle of visiting a branch. These digital initiatives have made getting a loan from LIC very convenient and fast, thereby enabling its customers to address their capital needs at the earliest. This guide should help you navigate through the entire process of loan application at LIC.
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
+Returns Since Inception of LIC Growth Fund
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