Loan Against LIC Policy: Interest Rate and Eligibility
A loan against LIC policy is a reliable way to meet urgent financial needs without surrendering your policy coverage. With a loan against LIC policy, policyholders can get loans at comparatively lower interest charges and flexible repayment terms. The LIC policy loan facility is available on eligible traditional LIC plans, and many borrowers also prefer the convenience of applying for a loan on LIC policy online. The LIC policy loan interest rate is generally lower than unsecured personal loans, making it a cost-effective borrowing option for policyholders.
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- Why You Should Opt for Loan against LIC Policy?
What Is A Loan Against LIC Policy?
A loan against LIC policy is a secured loan facility where policyholders can avail a loan by using the surrender value of their eligible LIC policy as collateral. Instead of surrendering the policy during financial emergencies, individuals can use a LIC policy loan to access immediate liquidity while continuing to enjoy the policy benefits and life cover. The LIC loan amount generally depends on the policy’s surrender value, while the LIC Loan Interest Rate is usually lower compared to unsecured loans.
Note: If the policy matures and the loan is not repaid, any outstanding loan amount will be deducted from the maturity benefit. The death benefit is paid after deducting the loan amount for the policyholder’s death.
Key Features of Loan Against LIC Policy
LIC of India offers loans against its insurance policy, which individuals can use for their own personal or commercial needs. Here are some important features of LIC policy loans:
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Competitive Interest Rates: The interest rate for loan against LIC policy 2026 depends on prevailing market conditions, government bond yields, and the applicant’s profile.
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Available on Select Policies: The loan facility is mainly offered on eligible LIC endowment plans and certain traditional LIC policies with surrender value benefits.
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Loan Based on Surrender Value: The LIC loan amount is calculated as a percentage of the policy’s surrender value.
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Higher Loan for Active Policies: Policyholders can get up to 90% of the surrender value for active policies and around 85% for paid-up policies.
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Policy Acts as Security: The LIC insurance policy remains pledged with LIC until the loan repayment is completed.
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Not All LIC Plans Qualify: Some LIC policies do not offer the loan against policy feature, so checking eligibility is important before applying.
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Risk of Policy Termination: If the outstanding loan amount and accumulated interest become higher than the surrender value, LIC may terminate the policy.
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Loan Recovery at Maturity: If the LIC policy matures before the loan is fully repaid, the remaining loan balance and interest are deducted from the maturity amount before payment to the policyholder.
Interest Rate for Loan Against LIC Policy 2026
The LIC Loan Interest Rate generally ranges between 9% and 11%, depending on the type of insurance plan and the lender’s terms. Since a Loan Against LIC Policy is secured against the policy’s surrender value, the interest rates are usually lower than unsecured personal loans. The LIC Policy Loan Interest Rate offered by LIC is typically around 9.00%–10.00%, whereas banks may charge 10.00%–15.00% for a Loan Against LIC or other insurance policies.
The table below highlights the maximum loan eligibility, applicable conditions, and loan against LIC policy interest rates for different LIC policies to help policyholders compare their options easily.
| LIC Plan | Eligibility for Loan | Maximum Loan Amount | Interest Rate |
| LIC Bima Jyoti | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Up to (10-year G-Sec Rate + 3%); compounded half-yearly |
| LIC Bima Ratna | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Higher of (10-year G-Sec Rate + 3%) or Non-Linked Fund Yield + 1% |
| LIC Dhan Sanchay | Regular/Limited: Minimum 2 years’ premiums paidSingle Premium: After 3 months or Free-look period | Regular/Limited: In-force up to 90%, Paid-up up to 80% of Surrender ValueSingle Premium: Up to 75% of Surrender Value | Higher of (10-year G-Sec Rate + 3%) or Non-Linked Fund Yield + 1% |
| LIC Jeevan Azad | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Higher of (10-year G-Sec Rate + 3%) or Non-Linked Fund Yield + 1% |
| LIC New Endowment Plan | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Based on IRDAI-approved method |
| LIC New Jeevan Anand | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Based on IRDAI-approved method |
| LIC Single Premium Endowment Plan | At least 1 policy year should be completed | Up to 90% of Surrender Value | Based on IRDAI-approved method |
| LIC Jeevan Lakshay | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Based on IRDAI-approved method |
| LIC Jeevan Labh | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Based on IRDAI-approved method |
| LIC Aadhaar Stambh | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Higher of (10-year G-Sec Rate + 3%) or Non-Linked Fund Yield + 1% |
| LIC Aadhaar Shila | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Higher of (10-year G-Sec Rate + 3%) or Non-Linked Fund Yield + 1% |
| LIC Jeevan Utsav | Premiums should be paid for at least 2 years | Before Regular/Flexi Income Benefit: In-force up to 75%, Paid-up up to 50% of Surrender ValueAfter benefit start: Loan linked to 50% of annual income benefit | Higher of (10-year G-Sec Rate + 3%) or Non-Linked Fund Yield + 1% |
| LIC Jeevan Umang | Premiums should be paid for at least 2 years | During PPT: In-force up to 90%, Paid-up up to 80%After PPT: Loan linked to 50% of annual survival benefit | Based on IRDAI-approved method |
| LIC Dhan Rekha | Regular/Limited: Minimum 2 years’ premiums paidSingle Premium: After 3 months or Free-look period | Regular/Limited: In-force up to 90%, Paid-up up to 80%Single Premium: Up to 75% of Surrender Value | Higher of (10-year G-Sec Rate + 3%) or Non-Linked Fund Yield + 1% |
| LIC New Bima Bachat | Minimum 1 policy year should be completed | Up to 90% of Surrender Value | Based on IRDAI-approved method |
| LIC New Money Back Plan – 20 Years | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Based on IRDAI-approved method |
| LIC New Money Back Plan – 25 Years | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Based on IRDAI-approved method |
| LIC Jeevan Umang | Premiums should be paid for at least 2 years | During PPT: In-force up to 90%, Paid-up up to 80%After PPT: Loan linked to 50% of annual survival benefit | Based on IRDAI-approved method |
| LIC New Children’s Money Back Plan | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Based on IRDAI-approved method |
| LIC Jeevan Tarun | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Based on IRDAI-approved method |
| LIC Jeevan Shiromani | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Based on IRDAI-approved method |
| LIC Bima Shree | Premiums should be paid for at least 2 years | In-force: Up to 90% of Surrender ValuePaid-up: Up to 80% of Surrender Value | Based on IRDAI-approved method |
| LIC Jeevan Dhara II | Regular Premium: Minimum 2 years’ premiums paidSingle Premium: After 3 months or Free-look period | Loan linked to 50% of annual annuity amount; maximum 80% of Surrender Value | Higher of (10-year G-Sec Rate + 3%) or Non-Linked Fund Yield + 1% |
| LIC Saral Pension | Loan available after 6 months from policy commencement | Loan linked to 50% of annual annuity amount | Higher of (10-year G-Sec Rate + 2%) or Non-Linked Fund Yield + 1% |
| LIC Jeevan Akshay – VII | Loan available after 3 months or Free-look period | Loan linked to 50% of annual annuity amount; maximum 80% of Surrender Value | Higher of (10-year G-Sec Rate + 3%) or Non-Linked Fund Yield + 1% |
| LIC New Jeevan Shanti | Loan available after 3 months or Free-look period | Loan linked to 50% of annual annuity amount; maximum 80% of Surrender Value | Higher of (10-year G-Sec Rate + 3%) or Non-Linked Fund Yield + 1% |
Eligibility Of Availing Loans Against LIC Policy
To avail of loans on LIC Policy, you need to fulfill certain eligibility criteria that are:
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The individual should be a citizen of India.
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The person should be a minimum of 18 years old or above
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The individual should be a policyholder and hold a valid LIC policy wherein at least 3 premium payments have been made.
What Are The Advantages Of Loans On LIC Policy?
Loan on LIC Policy is highly beneficial to the Indian consumer because:-
Higher Loan Amount: LIC policyholders can borrow up to 80%- 90% of their surrender value, making it one of the most attractive options in the market.
Lower Interest Rates: Opting for a loan against LIC Policy will cost you lower interest rates compared to the usual 13-15% of interest for personal loans. The interest charged is calculated based on the total amount and the frequency with which the premium amount is paid. The higher the frequency and premium amount paid, the lower the interest rate. LIC offers around 10-12%.
Faster Disbursal of Loan: The loan against an LIC Policy is disbursed comparatively faster, as no complicated paperwork is required. An individual can receive the loan amount within 3-5 days.
Secured Loans: As these loans are disbursed, taking their LIC policy as collateral, they are much more secured in nature.
How Is A Loan Against LIC Policy Better Than Taking Other Loans?
| Parameters | Loans against LIC Policy | Other Loans |
| Interest Rate | 10-12% | 12-15% |
| Process | Easy and quick process. No documentation needed | Lengthy paperwork and application process |
| Mortgaged Requirements | No Guarantor or Security Required | Security required |
How To Avail A Loan Against LIC Policy?
Here is how to get loan against LIC policy using offline and online methods:
Offline:-
Step 1: Visit the nearest LIC branch office
Step 2: Fill out the loan application form
Step 3: Submit the required documents
Step 4: Once processed, the loan will be disbursed within 3-5 days
Online:-
An individual can opt for an online loan process only if they are registered for premium services on the insurer’s website. The steps to be followed are:-
Step 1: Visit LIC of India Customer Portal and proceed with LIC login.
Step 2: Scroll down to 'Online Services' and click on 'Online Loan'.
Step 3: Log in through the customer portal using your registered credentials. Users who are not registered must first activate the ‘Premier Services’ facility.
Step 4: Select the LIC policy against which you want to apply for the loan facility.
Step 5: Fill in the required information such as loan amount, repayment details, and bank account information. Upload scanned copies of KYC documents, including PAN card, Aadhaar card, and a cancelled cheque.
Step 6: Verify the entered details, accept the terms and conditions, and complete the digital submission of the loan request.
Note:-
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The status of the loan policy can be checked online or via SMS or call
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In case the repayment of the interest amount exceeds 30 days from the due date, LIC has the right to foreclose the policy to settle the loan amount
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In case there is a case of the sudden demise of the policyholder, LIC has the right to deduct the loan amount as well as the interest from the claim settlement. After deduction, the remaining amount shall be sent to the beneficiaries of the insurance policy.
What Documents Are Required To Avail Loans against LIC Policy?
The following documents are required to avail Loan against LIC Policy:-
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The original documents of the insurance policy bond
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The loan application for the same
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The assignment deed where you allot the loan to LIC
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Individual’s identity proof
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Individual’s address proof
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Individual’s income proof
How To Repay Loans Against LIC Policy?
Repayments of loans against LIC Policy are flexible as they are not paid in EMI’s. The loan tenure ranges from a minimum term period of 6 months to the maturity of the insurance policy. If an individual settles a loan within the minimum term period of 6 months, he/she is still liable to pay the interest for the entire duration of 6 months. An individual has the option to repay the loan using the following methods:
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Repay the principal amount along with the interest
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Settle the principal sum with the claim amount at the time of the maturity of the insurance policy. Hence, repay only the interest amount
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Repay the interest amount yearly and repay the principal amount differently
Note: LIC can terminate the policy if the total debt amount due exceeds the surrender value. If the repayment period exceeds the policy tenure, LIC can deduct the loan amount from the policy's maturity amount.
Wrapping It Up
Loans against LIC Policy have massive benefits as it is a trusted and reliable source and an easier process to avail of secured loans with lower interest rates. A LIC policyholder, therefore, has an added advantage in securing their future along with easy accessibility to loans for the financial crisis.
LIC Resources
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FAQ's
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Q: What will happen if the policyholder takes a loan against the LIC policy and dies without repaying?
Ans: If the policyholder dies before repaying the loan against LIC policy, LIC deducts the outstanding loan amount along with the LIC policy loan interest rate from the death claim amount. The remaining balance is then paid to the nominee or beneficiaries of the LIC insurance policy. -
Q: Can I avail of loans against LIC Term insurance?
Ans: No, a loan against LIC term insurance is not available because term insurance plans do not have any surrender value or maturity benefit. -
Q: What is the current LIC loan interest rate?
Ans: The loan against LIC policy interest rate generally ranges between 9.00% to 10.50% per annum, depending on LIC guidelines and market conditions. The actual interest rate for loan against LIC policy 2026 may vary based on the policy type and the applicable terms at the time of borrowing. -
Q: Are all LIC policies eligible for availing loans?
Ans: No, not all LIC insurance policies are eligible for a loan facility. Loans against LIC policy are usually available on whole life plans, endowment plans, money-back policies, income plans, and ULIPs that have a surrender value. Term insurance plans are not eligible for LIC policy loans. -
Q: How can I calculate the loan value against the LIC policy?
Ans: The LIC loan amount is usually calculated as a percentage of the policy’s surrender value, including accrued bonuses. Policyholders can generally get up to 90% of the surrender value for active policies and around 85% for paid-up policies. -
Q. Can I take a loan against my LIC policy?
Yes, you can apply for a loan against LIC policy if your plan has acquired a surrender value. Eligible endowment and money-back plans allow policyholders to get a LIC loan with simple documentation and flexible repayment options. -
Q. What is the interest rate for LIC loans?
The LIC loan interest rate generally varies depending on the policy type and prevailing rates declared by LIC. The loan against LIC policy interest rate is usually lower than unsecured loans, making it a cost-effective borrowing option. -
Q. How to check LIC loan eligibility?
You can check LIC policy loan eligibility by verifying whether your policy has completed the minimum premium payment period and acquired surrender value. Policyholders can also check eligibility through the loan on LIC policy online facility on LIC’s portal. -
Q. Which LIC policy is not eligible for loans?
Term insurance and policies without surrender value are generally not eligible for a loan against LIC. Most pure protection plans do not support LIC loan facilities because they do not accumulate savings or maturity benefits.
Different types of Plans
*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
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
++Returns are 10 years returns of Nifty 100 Index benchmark
˜The insurers/plans mentioned are arranged in order of highest to lowest first year premium (sum of individual single premium and individual non-single premium) offered by Policybazaar’s insurer partners offering life insurance investment plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in
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