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LIC Loan
Loan Against LIC Policy – Details
Interest Rate | 10-12% |
Loan Amount | Up to 90% of the surrender value |
Minimum Tenure | 6 months |
Pre-payment Charges & Foreclosure Charges | Nil |
Repayment Options | Bullet Repayment with an option to pay monthly interest |
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LIC Loan
LIC policies are life insurance policies that provide insurance to subscribers against adverse events in one’s life, such as death or illness by paying annual premiums on the life insurance policy for the policy term. In case of an endowment policy, the beneficiaries either get the policy amount of an event covered under the policy or else receive maturity benefits at the end of the policy term.
Along with the life insurance plans, a lesser-known fact about LIC policies is that you can also avail up to 90% of the surrender value of your LIC policy as a personal loan. The LIC personal loan or LIC loan can be used to meet unexpected personal expenses.
LIC Loan Interest Rate
The current LIC policy loan interest rate is in the range of 10-12%. Given that the loan taken against the policy is secured by the LIC policy itself, interest rates on such loans are quite low and hence, make them an attractive personal loan option. Loans on LIC policy can be availed from LIC or other leading banks such as SBI, Axis Bank, Bank of India and others. The rate of interest on policy loans can vary from bank to bank.
LIC Personal Loan
Loan on LIC Policy Features and Benefits
You can get following features and benefits on LIC Loan:
- Purpose: This loan can be availed to meet your urgent personal expenses. These may be for unforeseen medical situations, educational, marriage expenses, or simply for getting out of the financial crisis.
- Loan Amount: LIC loan can be availed up to 90% of the surrender value.
- Loan Tenure: A minimum of 6 months has to be served as tenure for a LIC Loan.
- Interest rates: LIC policy loan interest rates are in the range of 10% – 12%.
- Termination: LIC can terminate the policy in case the total amount of debt reaches more than the surrender value. LIC also holds the leverage of deducting the loan amount from the maturity amount if the policy matures before the completion of loan repayment.
- The demise of the policyholder: If it so happens that the policyholder dies during the tenure of the loan, LIC will deduct the interest and outstanding loan amount from the amount of claim settlement.
Benefits of Loan against LIC Policies
You can get the following benefits on life insurance policy loans
- You get quick, instant personal loans against the security of your life insurance policy.
- You can avail of the loan from LIC itself, or you can also borrow from other banks.
- You do not need to cancel or surrender your existing policy, thus allowing you to keep your savings intact and at the same time, meet your personal expenses.
- You do not need any additional documents, or credit score to get this loan.
- You can get this loan at very low-interest rates.
LIC Policy Loan Eligibility Calculator
LIC Policy Loan Calculator uses the following parameters to ascertain if you are eligible to get a loan and the amount of loan you are eligible for:
- Type of policy
- Tenure of policy
- Surrender Value
Type Of Policy
Life Insurance Corporation of India typically allows personal loan against LIC endowment policies as per conditions specified in the policy bond. Some of the popular LIC policies on which loan can be taken are:
- Jeevan Pragati
- Jeevan Labh
- Single-Premium Endowment Plan
- New Endowment Plan
- New Jeevan Anand
- Jeevan Rakshak
- Limited Premium Endowment Plan
- Jeevan Lakshya
Tenure Of Policy
You are eligible for a loan against policy only when you have paid 3 years of premium as the policy acquires a surrender value only after 3 years of paid premiums. Your loan tenure is restricted to the remaining tenure of the maturity of your loan policy.
Surrender Value
The amount payable by Life Insurance Corporation in the event that the policyholder decides to discontinue the policy is known as the Surrender or Cash Value of the policy. This value is very low in the initial years and hence, taking a loan against LIC policy is not considered a bright idea until the policy is old enough. The surrender value of policy increases with the holding period of the policy. Hence, the higher the holding period of the policy, the higher is the loan amount you are eligible for.
Documents required for LIC Loan
To get a LIC Loan, you need to submit the following documents:
- LIC policy
- Identity Proof: Aadhaar Card, Voter ID Card, Passport
- Address Proof: Aadhaar Card, Voter ID Card, Driving License, Utility Bills
- Proof of income: Salary Slips, Bank Account Statement
- Deed of assignment
LIC Loan Repayment
LIC Policy Loans have a minimum tenure of 6 months and a maximum up to the maturity of the insurance plan. You have to pay at least six months interest, even if you wish to settle the loan within six months. You can follow any of the LIC loan repayment procedures:
- pay the interest along with the principal
- pay only the interest and principal amount can be settled with the claim amount on the maturity
- pay interest for a few years and repay the principal when you have excess cash
Unlike other loans, LIC loan is not paid in EMIs, thus giving a lot of flexibility in repayment.
FAQs
✅How Much Loan Amount Can I Get From LIC?
LIC Personal Loan can be as high as 90% of the surrender value of your policy, as long as you have paid 3 complete years’ premium in full.
✅How Can I Know My LIC Loan Status?
Since LIC loan is availed against the policy, you can know the status of your loan when you check your policy status online by logging into your account, or by an SMS or call.
✅What Is The Minimum Tenure On LIC Personal Loan?
Even if the principal is settled in a couple of months, the minimum time allowed for LIC loan repayment is six months.
✅What Happens If I Default My Interest Payment?
If the interest is not paid for 30 days after the due date, LIC can foreclose the policy and settle the loan amount against the proceeds.
✅How Can I Apply For A Loan Against LIC Policy?
You will need to visit the bank branch and submit Form 5196 to your policy agent who will follow up to get a loan for you.
✅Is There A Provision Of LIC Online Loan?
Yes, you can visit the official website of LIC and avail a loan against LIC policy after subscribing to the LIC Premier Services, once you have registered yourself.
✅What Will Happen If The Policy Holder Dies While He Has Taken A LIC Loan Against Policy?
If the policyholder dies during the tenure of the loan, LIC will deduct the interest and outstanding loan amount from the amount of claim settlement and pay the remaining settlement amount to the beneficiaries of the policy.
✅What Will Happen If One Defaults While He Has Taken A LIC Loan Against Policy?
LIC can terminate the policy in case the total amount of debt including the outstanding loan and interest payment due reaches more than the Surrender Value. LIC also holds the right to deduct the loan amount from the maturity amount if the policy matures before the completion of loan repayment.

- Valid for 6.5 months from date of issuance
- Includes home care treatment, pre and post hospitalization expenses
- 15 days waiting period
- Hassle-free claims
- Policy will be delivered within 5 working days of submitting the form
SecureNow Insurance Broker is the intermediary providing insurance services.
IRDAI Reg No.: 425
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