Loan Against LIC Policy : Interest Rate, Eligibility & How To Get Loan

News: Life Insurance Corporation of India (LIC) not only offers insurance plans but also provides secured personal loans known as loans against LIC policies. These loans can be a great option if you need funds urgently and have an LIC policy. Let’s dive into the details:

Interest Rates

• The interest rates for loans against LIC policies are generally low compared to other types of personal loans.

• The exact interest rate depends on your profile (such as credit history and repayment capacity).

Eligibility Criteria

To be eligible for a loan against your LIC policy:

1. You must be at least 18 years old.

2. You should have a valid LIC policy.

3. The LIC policy you use as collateral must have a guaranteed surrender value.

4. You must have paid at least 3 years of LIC premiums in full.

Features of Loan Against LIC Policy

Loan Amount: The loan amount is an advance based on the surrender value of your LIC policy.

Collateral: Your LIC policy serves as collateral for the loan.

Policy Type: This loan is available only for LIC endowment policyholders.

Loan Limit: Typically, you can borrow up to 90% of the policy value. For paid-up policies, this amount is usually 85%.

Interest Payment: The interest on the loan amount needs to be paid semi-annually.

Quick Disbursal: Since your LIC policy acts as collateral, the loan amount is disbursed quickly.

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How to Apply for Loan Against LIC Policy

Follow these steps to apply:

Check Eligibility: Ensure you meet the eligibility criteria.

Contact LIC: Visit your nearest LIC branch or contact them online.

Submit Documents: Provide necessary documents, including your LIC policy details.

Loan Approval: Once approved, the loan amount will be credited to your account.

Documents Required

• Valid ID proof (Aadhaar card, PAN card, etc.)

• Address proof

• LIC policy documents

Loan Repayment Schedule

• Repay the loan as per the agreed schedule.
• Failure to repay may result in the LIC withholding your policy.

A loan against your LIC policy can be a lifeline during financial emergencies. Make sure to explore this option if you need funds and have an LIC policy in your name.

FAQs

Q: Is it possible to obtain a loan against an LIC policy with a low credit score?

A: Yes, you can secure a loan against your LIC policy without the need for a credit check. Therefore, your credit score does not affect your eligibility for this loan.

Q: Can the loan amount be used for any purpose?

A: Absolutely, similar to a personal loan, the funds acquired against your LIC policy can be utilized for any purpose as per your requirements.

Q: What are the repercussions if I am unable to repay the loan against my LIC policy?

A: Failing to repay the loan could result in the forfeiture of all benefits accumulated under the policy to the lender. Timely repayment is crucial to avoid adverse outcomes.