PLI Loan Against Policy

A life insurance policy is usually bought with a long-term plan in mind. But sometimes, money is needed much sooner. A medical expense, education fee, home repair or any other unexpected requirement can put pressure on your finances. If you have a Postal Life Insurance (PLI) policy, you may not necessarily have to surrender it to arrange the money.

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Certain PLI policies allow you to take a loan against the policy. In simple terms, you can use the value built up in your policy to borrow money while keeping the policy active.

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What Is a Loan Against a PLI Policy?

A loan against a PLI policy is a facility whereby an eligible policyholder can take a loan on the surrender value of the insurance policy. The loan is collateral for the policy. This can be useful if you need to access funds but don’t want to permanently close your policy. If you surrender a policy, you lose the cover and future benefits that the policy will provide. You can keep the policy and repay the amount you borrowed plus interest as you need to with a loan.

But not all PLI policies have this provision. At present, India Post permits a loan facility against Endowment Assurance and Yugal Suraksha policies after 3 years and against Whole Life and Convertible Whole Life policies after 4 years. Loans are not available on Anticipated Endowment Assurance and Children’s policies.

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Which PLI Policies Are Eligible for a Loan?

The waiting period depends on the type of PLI policy you hold. The broad eligibility is:

PLI Policy	Loan Availability
Endowment Assurance (Santosh)	After 3 years
Yugal Suraksha	After 3 years
Whole Life Assurance (Suraksha)	After 4 years
Convertible Whole Life (Suvidha)	After 4 years
Anticipated Endowment Assurance (Sumangal)	Not available
Bal Jeevan Bima (Children Policy)	Not available

So, if you have recently purchased a PLI policy, you cannot immediately use it to raise funds. You first need to complete the required policy period.

How Much Loan Can You Get Against a PLI Policy?

Fundamentally, your loan amount will not only depend on the amount of premiums you have paid. Rather, it will be determined by the surrender value of your life insurance policy. Generally, the maximum loan available for you can go as high as 90% (or the lowest one, whichever the PLI's policy rules stipulate, say a minimum of 50%) of the surrender value of the insurance policy.

So, when a life insurance policy has a surrender value of Rs. 2 lakh per PLI, the maximum loans the policyholder could get would be around Rs. 1. 8 lakh. Ultimately, your actual loan amount available will depend on the policy details you have and the loan entitlement of PLI. So, instead of relying on the amount of premium alone to estimate the loan amount, one should rather check for the loan quote available from the PLI for their policy.

What Is the Interest Rate on a PLI Loan?

The PLI loan interest rate is fixed at 10% per annum. Interestingly, it should be noted that interest is only calculated at six-monthly intervals but payable once every six months. So, when considering a borrowed amount, one must also take into account the borrowing cost, since interest is the main cost of financing. Borrowing, for instance, Rs. 1 Lakh, at 10%, p. a. would cost you Rs. 10,000 for the whole year, and that's subject to the calculation and repayment terms being applicable.

Besides the rate, one should understand that it is not free money. When the loan becomes nonperforming (i. e., defaulted on the payment of any interest), the accrued interest could be reduced and eventually deducted from the benefits that would have been received under one's insurance plans after maturity or a life contingency.

Things to Check Before Taking a PLI Loan

While the amount of money you get to borrow will probably capture your attention, you are also advised to get yourself acquainted with other factors that affect your policy in case you get a loan.

Ensure that your policy has reached the maturity point for it to qualify for a loan.
Verify the current surrender value of the policy and what you can borrow against it.
Understand the 10% annual interest rate and also the six-monthly repayments.
Make sure of what has been repaid so far from interest and principal loan.
Figure out what your current outstanding loan will do to your surrender or death benefit.
See and compare PLI cost for loans with other loan sources which may be available to you.
Do not consider taking a loan bigger than necessary even though you can do it.

The basic objective is that you should take advantage only when it really helps you with short-term financial needs, and not borrow because the policy allows it.

How to Apply for a PLI Loan?

The process broadly involves these steps:

Step 1: Check the eligibility of the policy: Ensure you have served at least three years, and maybe up to four years according to the product.

Step 2: Find out your eligible loan amount: The amount eligible to you is decided by your policy's surrender value.

Step 3: Fill out the loan form: Provide details like policy number, sum assured, maturity date, and the loan amount you are requesting.

Step 4: Submit the documents: The documents you need to submit with your application are your original policy, premium receipts, assignment form and any other documents PLI needs.

Summing Up

A loan against a PLI policy can be a practical option when you need funds but do not want to give up your life insurance policy. For eligible policies, the loan is linked to the surrender value, with the amount generally going up to a specified proportion of that value. The interest rate is currently 10% per annum, calculated on a six-monthly basis.

Before applying, check your policy's loan eligibility, available amount, interest payable and the effect of an unpaid loan on your eventual policy benefits. If the borrowing cost fits your budget, taking a loan may be a more suitable option than surrendering a long-term PLI policy simply to arrange short-term cash.

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FAQs

Can I take a loan against my PLI policy?

Ans: Yes, you can take a loan on any PLI policy which qualifies for loans. Any endowment assurance as well as Yugal Suraksha policy qualifies after 3 years, and a whole life policy qualifies after 4 years.
How much interest on a PLI loan?

Ans: The rate of interest on a PLI loan is 10% per annum with yearly rests. The rate of interest is paid half-yearly. The PLI loan is usually up to 90% of the surrender value.
How many times can a PLI loan be taken?

Ans: PLI policyholder is eligible to avail of the facility of more than one loan as per the relevant rule of PLI and the outstanding loan balance. The third or subsequent loan may be available or not depending upon the value and the balance of the loan repaid.
Can I withdraw my PLI before maturity?

Ans: Yes, the policyholder can surrender the eligible PLI policy before maturity under the conditions specified in the policy. Surrendering the policy early could adversely affect the amount which will be paid out, and you could forgo some future benefits.
How to repay a PLI loan?

Ans: The PLI loan can be paid back by paying interest payable in 6 monthly instalments as principal instalment as and when due. Repayment can be made through the defined Post Office or PLI channels as defined.
How to calculate PLI loan amount?

Ans: The loan amount by PLI is calculated on the surrender value of the policy. The PLI guidelines provide that under certain situations, the policyholder may be eligible to get a loan up to 90% of the worth of the policy.
How to check PLI loan status?

Ans: You can easily check your PLI loan status on the official India Post PLI Customer Portal or from the concerned Post Office. It also helps to check your total outstanding amount and loan repayments.

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Author's Bio

Varun Agarwal IRDAI Certified Term Insurance Expert with 10+ Years of Experience

Varun has spent years in the insurance space, but what drives him isn't policies or premiums, it's the conversations he's had with real people. A young father in Pune wondering if his salary is enough. A newly married couple in Jaipur putting off "the insurance talk" for later. A mother in Chennai who never knew her husband was underinsured until it was too late.
These stories stay with him. As Head of Term Insurance at Policybazaar, Varun knows the numbers well — 52.4% of Indians are aware of term insurance, yet only 9.6% own it. And 87% of families don't realise they're leaving their loved ones with far less protection than they actually need. But behind every statistic, he sees a family that just needed someone to sit with them, explain it simply, and help them take that one step. That's exactly what Policybazaar's term insurance is built to do. In his words, "Most people aren't avoiding protection — they're just waiting for someone to make it easy. That's what we're here for."

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˜The insurers/plans mentioned are arranged in order of highest to lowest Sum Assured(SA) offered by Policybazaar’s insurer partners offering term insurance 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

+On the basis of your profile

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*The full refund of premium is available on availing the one-time option of refund of premium. Total premium paid for policy (paid for add-ons) will be the special exit value, payable on availing the one-time option of refund of premium if you wish to completely exit the policy.

+Rs. ₹361/month is the starting price for a ₹1 crore loan cover with an 8% interest rate for an 18-year-old male, non-smoker, with no pre-existing diseases, loan tenure up to 20 years, rounded off to the nearest 10

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