LIC Policies provide insurance to the client on any adverse life events like death, accident, or illness. Apart from providing life cover to its customers, LIC Policies has a great benefit that allows Policy Holder to get Loan against LIC Policy.
What is a Loan Against LIC policy?
A life insurance policy from LIC or other reputed private insurers is one of the securities you can use as collateral to take a personal loan to meet your domestic or personal requirements. Life insurance policy has annual premiums which you need to pay to the company. If any risky life event takes place under the policy, then the receiver will get the amount of money according to policy or the maturity benefit will be given at the end of the policy. A most important benefit that people are not aware of is money can be reward under personal loans against it, to solve your high-priority situations. You will get 90% of the claim value if you are eligible. Policy claims will be calculated as per the time of availing of a loan.
Surrender Value – It means the amount that is paid by LIC on adverse events and policyholder decides to cancel the policy, the cash vault is called the surrender value. The surrender value of the policy gets increased with an increasing period of the LIC policy. Higher holdings periods give you a good amount of eligibility.
LIC Policy Plans Eligible for Loan
1. Endowment Plans
- LIC Jeevan Pragati
- LIC Jeevan Labh
- LIC Single Premium Endowment Plan
- LIC New Endowment Plan
- LIC New Jeevan Anand
- LIC Limited Premium Endowment Plan
- LIC Jeevan Lakshya LIC Aadhaar Shila
- LIC Aadhaar Stambh
2. Whole Life Plans
- LIC Jeevan Umang
3. MoneyBack Plans
- LIC Bima Shree
- LIC Jeevan Shiromani
- LIC NEW MONEY BACK PLAN – 20 YEARS
- LIC NEW MONEY BACK PLAN – 25 YEARS
- LIC NEW BIMA BACHAT
- LIC NEW CHILDREN’S MONEY BACK PLAN
- LIC Jeevan Tarun
4. Term Assurance Plans
- LIC TECH TERM
- LIC Jeevan Amar
- LIC Anmol Jeevan II
5. Benefit rider plans
- LIC’s Linked Accidental Death Benefit Rider
- LIC’s Accidental Death and Disability Benefit Rider
- LIC Accident Benefit Rider
- LIC New Critical Illness Benefit Rider
- LIC New Term Assurance Rider
Eligibility for Loan against LIC Policies
For applying for a loan against LIC you should go with the following approval process:
- You should have your own activated LIC life insurance policy.
- Your policy should be unit-linked or term insurance policy
- The policy should have admitted defence value.
- Citizens of India can only apply for LIC policies.
Loan against LIC Policy Benefits
- The facility of claiming a loan against LIC Policy is only provided to partnerships, individuals, companies, and single owners of businesses or property.
- You can get the loan on the surrender value of your LIC policy. Maximum cases get 70% to 90% of the surrender value of the policy.
- An online application is available.
- For getting the approval of a loan against your LIC policy, you need to submit a proven action on the document. It will assign the rights to borrow credits from your LIC Policy.
- You can borrow more amount of value than surrender value by subjecting your LIC Policy.
- You can get all the details of your LIC Policy tracked with online and offline networks.
- Only pay interest on the sum you borrow not from the entire amount.
- You can get instant personal loans against the security of your LIC.
- You can borrow a loan against LIC itself or also from other banks.
- If you are unable to keep you’re saving instant, then you do not need to close your running policy.
- You can get a LIC Policy loan with a low interest rate.
Why Loan against LIC Policy is better than other Loans?
The LIC policy loans have several advantages over other loans:
- There is no Guarantor or Security required for getting a loan from LIC.
- You can flexibly repay your loan interest and principal amount.
- LIC offers a very lower Interest Rate amount.
- Available at all nearest bank branch where you live.
How to apply for a Loan against LIC Policy?
If you fall under the eligibility criteria; you need to follow few steps to borrow a loan against your LIC policy:-
- Visit any bank to the nearest branch.
- Fill application form for a loan and submit it to the representative available there with the required documents.
- Clients who already have a bank account in that branch will need minimum documents.
- Submit form and all documents
- A representative will submit your form further, and you will get the approval of the loan if the entire documents are correct and have no verification problem.
- If the loan is approved, then the amount will be in your savings bank account.
LIC Policy Loan Interest Rate
LIC’s current rate of interest is ranging from 10% to 12% per annum. The loan will be secured itself by your Policy. Life Insurance Corporation charges a very low amount of interest with a friendly nature to pay the principal amount. It makes low interest so you can also go for a personal loan option. Banks that provide loans against Life Insurance Corporation policy are SBI, Axis Bank, Bank of India, ICICI Bank, and many others.
Documents Required for Loan against LIC Policy
A Policyholder needs to produce the following documents for a loan on his Policy:
- Original LIC Policy Document
- Address Proof (Ration Card, Aadhar Card, Electricity Bill or Passport)
- ID Proof (Aadhar Card, PAN Card or Voter ID Card)
- Income Proof (Bank Account Statement, Salary Slip, Form 16)
How to Repay the Loan on LIC Policy
Repayment of LIC Policy loan will be lasting a minimum of up to 6 months and maximum up to your maturity of Life Insurance Corporation Policy. Life Insurance Corporation gives a very flexible repayment for the entire client who owns the LIC policy. If you wish to pay it early than six months, then you can.
LIC Loan Repayment Plans
You can follow any of the Life Insurance Corporation repayment plans:-
- You can pay the interest with the principal at the same time.
- You can pay only the interest, and the principal amount will be calculated with the claim amount of the LIC policy.
- You can pay only interest to LIC for a few years and then repay the principal amount when you have the availability of cash.
- LIC loan payment is not like EMIs. LIC gives a lot of flexibility for repaying your loan interest and principal amount.
Frequently Asked Questions (FAQs)
You can get a loan against a list of approved LIC policy plans. These LIC Policy plans include unit-linked plans, endowment plans, whole life plans, and income plans from many insurers. However, a term insurance policy is not entitled to getting the loan on LIC Policies.
You can get a loan against the insurance policy of LIC starting at Rs 2 lakh, and up to 90% of the surrender value of the policy you applied.
Visit the nearest LIC Branch or Bank that provides a loan on LIC Policy and submit a filled-up Loan Against Security application form, the original policy document, address, ID, and income proof. The LIC Branch or Bank will inform you about details like loan eligibility, tenure, and interest rates.
The Loan Against LIC policy will be paid out as an overdraft into your linked Bank account. You can draw the funds from your account any time you want.
You need original policy documents, address proof, ID proof, and income proof to get the loan on LIC policy.