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LIC Loan

Loan Against LIC Policy in 2022

Last Updated 25th Jan 2022

  • If you are an LIC policy holder you can avail LIC Personal Loan in case of emergency.
  • You can avail up to 90% of the surrender value of the policy.
  • To apply for a loan against LIC policy you can use two methods- online as well as offline method.
Interest Rate 10.25% Check Best Offers
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
    Apply for Personal Loan @ 10.25%* Get upto ₹ 1,000* Cashback

    Loan Against LIC Policy

    LIC policies are life insurance policies that provide insurance to you or your family members against adverse events in your life, such as illness or death by paying annual premiums on the life insurance policy for the policy term. However you can also avail up to 90% of the surrender value of your LIC policy as a personal loan against it. The LIC personal loan or LIC loan can be used to meet unexpected personal or business expenses.

    LIC Loan Interest Rate

    In case of LIC Personal Loan, the loan is secured by the LIC policy itself, thus the rates are lower in comparison to regular personal loans. The current LIC policy loan interest rate is in the range of 10.25%-36.00% and can vary from bank to bank. You can avail Loans on LIC policy from Life Insurance Corporation of India (LIC) or other leading banks such as SBI, Axis Bank, Bank of India and others at 1-2% lower rates than personal loan rates. Some Personal loan rates for top lenders is listed as follows:

    BankInterest Rate
    LIC (Life Insurance Corporation of India)As per applicants profile
    Axis Bank 10.49%
    ICICI Bank 10.25%
    SBI 9.60%
    HDFC Bank 10.25%
    Bajaj Finserv 12.99%

    Benefits and Features of Loan against LIC Policy

    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 for upto 90% of the surrender value.
    • 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 interest rates are lower than regular personal loan rates.
    • A minimum of 6 months has to be served as tenure for a LIC Loan.
    • 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.
    • If the policy holder dies during the tenure of the loan, LIC will deduct the interest and outstanding loan amount from the amount of claim settlement.

    How to Get Loan on LIC Policy?

    There are two methods through which you can apply for a loan against lic- online as well as offline.

    Before applying for a loan against policy, it is important to ensure whether you are eligible for a LIC policy loan or not. For this login to the LIC account by visiting the LIC e-service website. Further, submit Form 5196 to your policy agent who shall follow up to get a LIC loan for you.

    Offline Process for Loan against LIC Policy

    • Visit the nearest bank branch that provides loan against LIC policy
    • Fill the LIC application form
    • Submit KYC and policy documents for verification
    • As soon as the documents and the policy is verified, your loan is approved.

    Online Method for Loan against LIC Policy

    • Visit the official website of the bank/NBFC against which you wish to avail a loan.
    • Apply for a loan against LIC policy under the Personal loan tab or Loan against securities.
    • Fill the online LIC loan application form.
    • Upload and submit the scanned copies of KYC and policy documents.

    Registration & Login Process for LIC Policy Online

    You can apply for a Loan against LIC Policy online on the LIC eServices Portal. If you haven’t yet registered on the portal, follow the registration steps as mentioned below:

    Registration Process

    Steps for registration process for LIC Policy are:

    • Visit the LIC e-Services Portal
    • Click on the “Don’t Have an account? Sign Up” option
    • Fill application form with details like name, address etc
    • Click ‘Proceed’
    • Set a new password
    • Use mobile number or email ID to log into your account

    Once, you have registered, you can now login and apply for LIC Loan

    Login Process

    To login, follow the below mentioned steps:

    • Go to the LIC e-Services Portal
    • Use your User ID or Email/mobile number
    • Enter the password

    Loan Limits Against LIC Policy

    Loan Limits Against LIC Policy are as follows:-

    • Loan on lic policy is up to 90% of the surrender value at the time of the application
    • The limit is lowered to 85% of the surrender value if it is a paid-up plan
    • In both the cases cash bonus applicable to the life insurance policy can be used as collateral

    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:

    • LIC policy loan eligibility is limited to people aged between 21-65 years.
    • Further it depends upon for a loan depends upon type of the policy, tenure of the policy and surrender value.

    LIC Policies against which Loan can be Sanctioned

    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 you can take a loan 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 for LIC Loan

    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

    Loan Against LIC Policy vs Personal Loan

    Loan Against LIC PolicyPersonal Loan
    Loan against Policy is a secured loan that you can avail against your LIC policy. Personal loan is an unsecured loan that does not require any collateral.
    You can avail loan upto 90% of the surrender policy.You can avail a maximum loan amount of upto ₹ 1,00,00,00,000
    LIC Loan Rates are 1-2% lower than Personal loan ratesPersonal Loan Rates are in the range of 10.25%-36.00%.
    LIC loan provides flexible repayment options such as bullet repayment. Monthly EMI etc.You can repay a personal loan using monthly EMI.

    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 loans are not paid in EMIs, thus giving a lot of flexibility in repayment.


    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.

    What is the Rate of Interest on Loan against LIC Policy?

    The interest rate on loan against LIC policy is based upon personal loans as the rates are usually a bit lower than regular PL rates. Current personal loan rates are in the range of 10.25%-36.00%. Any person who is above 18 years of age and has a valid LIC policy can apply for this loan.

    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.This however, may across all LIC Personal Loan Providers.

    What Happens If I Default My Interest Payment?

    If the interest is not paid for 30 days after the due date, LIC policy loan lender 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. Apart from that, you can also apply for a loan against LIC Policy through the online portal of the respective bank.

    Is There A Provision Of LIC Online Loan?

    Yes, you can get a LIC loan online by visiting the official online portal of the bank or the lender, from where you wish to get a loan. However, to complete the application process, ensure that you have the scanned copies of the required documents.

    What Will Happen If The Policy Holder Dies While He Has Taken A LIC Loan Against Policy?

    If the policy holder 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 loan lenders also hold the right to deduct the loan amount from the maturity amount if the policy matures before the completion of loan repayment.

    Does LIC give Personal Loans?

    Yes, Life Insurance Corporation of India offers personal loans against the LIC Policy. The eligibility criteria for personal loan is any person who is in a age range of 23 years- 58 years can apply for a personal loan for maximum tenure of 60years.

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