Loan Against LIC Policy

Below are the key LIC loan details:

• The loan on LIC policy can be availed against endowment policies only. Term plan insurance policies are not eligible for a loan.
• The loan can be taken more than once on the policy by clearing the earlier one.

• LIC personal loan interest rate has to be paid once in 6 months.
• You can either make LIC loan payment along with LIC interest rate on policy or just pay the interest and allow the principal amount to be deducted from the accumulated corpus during claim settlement.

The answer to how to get loan from LIC insurance policy is given below in easy steps:

• Firstly, register on the LIC website. The link to register can be found on the LIC website's home page.
• You can click on the Customer Portal. Click on the New User. Already registered users can simply log in.
• Before worrying about how to take loan against lic policy, please note that you will need your policy details and some personal details like PAN number/ Aadhaar number/ Passport details to register on the website. The details should match with details as mentioned in the policy.
• Once you have registered, you can log into the LIC customer portal
• After logging in, register for LIC Premier Services for LIC online loan apply.
• To apply for the LIC Premier Services or LIC personal loan, you need to go to Service Registration-> Service Request-> Premier Services Registration.
• The registration is just a 3-step process. You have to download an auto-generated form, take a printout of the form and sign it, and then scan and upload the document on the portal. Also upload a scanned copy of your PAN/ Aadhaar/ Passport for identification.
• Subsequently, you can expect to receive approval for Premier Services in a few days or weeks

The following are the key features of the Loan Against LIC Policy:

• The quantum of the loan against policy is 90% of the surrender value.
• Surrender value is the value that a policyholder will be given if the policy is surrendered before the maturity of the policy.
• An endowment policy acquires surrender value after premiums have been paid for 3 years. It is 30% of the basic premiums paid, excluding the first year premium.
• Premiums for riders such as accidental death benefit are not included in the calculation.
• The minimum period for LIC loan repayment is 6 months.
• If there is a claim either due to maturity of the policy or the death of the policyholder within 6 months from the date of the loan then, interest will be calculated only till the date of maturity/death.
• The policy will be assigned to LIC and all the rights of claim will lie with LIC till the loan is cleared.
• If you feel that you are stuck with an endowment policy of long term, you can avail fringe benefit on the policy by taking a loan at an LIC personal loan interest which is much less compared to Personal Loans from banks. Though the returns and life cover offered for these policies are much less when compared to term plans, premature closure is not a good option. Instead, availing a loan would be a wiser option.
• Now you can apply for the LIC loan online which has substantially reduced the loan processing and disbursal time.
• You don't have to submit a pile of documents. The only document that is required is the original LIC policy.
• Even without a good credit score, you can avail the loan against insurance policy. Policy assigned to LIC is like a cash margin which entitles them to recover the dues by surrendering the policy, in case the borrower delays or does not pay LIC loan interest.
• The LIC policy loan interest rate is much less when compared to a Personal Loan.

• Age: Applicants should be at least 18 years old when applying for the loan to meet the LIC loan eligibility.
• Nationality: Most banks or lenders offer LIC loans only to Indian residents.
• Occupation: Salaried, self-employed businessmen, self-employed professionals, and pensioners can apply for this loan.
• Income: Applicants must have a regular source of income to service the loan repayment to fulfill the LIC policy loan eligibility.

• Original LIC policy
• Address proof
• Income proof
• Premium paid receipt
• Passport size photograph

If you want LIC personal loan apply online by following the registration and login process for LIC Policy portal as mentioned below:

• The link to register can be found on the LIC website's home page.
• You can click on the Customer Portal. Click on the New User. Already registered users can simply log in.
• To register yourself on Loan against LIC Policy portal you need to go to Service Registration-> Service Request-> Premier Services Registration.
• Download an auto-generated form.
• Take a printout of the form and sign it.
• Scan and upload the document on the portal. 
• Also upload a scanned copy of your PAN/ Aadhaar/ Passport for identification.
• For login, you will need your LIC policy loan details and some personal details like PAN number/ Aadhaar number/ Passport details to register on the website. The details should match with details as mentioned in the policy.
• Once you have registered, you can log into the LIC customer portal.
• The portal can also be used to track LIC policy loan status.

The payment for personal loan on LIC policy can be done within 6 months and maximum up to the maturity of the policy. Unlike other loan facilities, LIC of India loan payment is not done in EMIs, which gives you a lot of flexibility in repayment. You can make repayment through the following ways:

• Pay the LIC loan interest payment online with the principal amount.
• Pay only the interest amount and the principal amount can be settled by the claim amount on the maturity.
• Pay interest for some years and then repay the principal amount when you have excess funds.

Additional Reading: Check CIBIL Score by Pan Card

The maximum loan limit for the LIC Policy Loan varies from lender to lender. You can get a maximum of up to 90% of the surrender value of the policy, depending on your age, income, loan amount requirement, policy value, and other eligibility parameters.

LIC India permits policyholders to avail a Personal Loan against their LIC endowment policies. Some of the plans that qualify for a Personal Loan are as given below:

• Jeevan Pragati
• Jeevan Labh
• New Endowment Plan
• Single Premium Endowment Plan
• New Jeevan Anand
• Jeevan Rakshak
• Limited Premium Endowment Plan
• Jeevan Lakshya

LIC surrender value is the amount payable by the LIC to the policyholder when the policy is surrendered before the maturity of the policy. There is a lock-in period of 3 years for a LIC policy. The policy can be surrendered after completion of 3 years from the date of issue of the policy and the premiums are paid regularly.

On surrendering the policy all the benefits vested in the policy along with protection cover will cease to exist. It is not wise to surrender the policy when in need of urgent funds. The alternative would be to avail a loan against the policy. Surrender the policy if you are dissatisfied with the terms and conditions and do not genuinely intend to continue with it.

• Guaranteed Surrender Value: This is the surrender value guaranteed by the insurance company to the policyholder in case of submitting for a claim before maturity.

In case of regular premium policy, Guaranteed Surrender Value of LIC policy is 30% of the basic premium paid. The Company excludes the first year’s premium paid while calculating the surrender value.

In a single premium policy, the Guaranteed Surrender Value will be 90% of the single premium paid. The Company will exclude the extra premiums paid if any.

• Guaranteed Surrender Value of Vested Bonuses: Along with the Guaranteed Surrender Value, the Company will also pay surrender value of vested bonuses, if any. 

The Surrender value of vested bonuses is vested bonuses multiplied by the policy surrender value. The percentage applicable will range from 16% to 35% depending upon the policy year (the year in which the policy is surrendered).

• Special Surrender Value: LIC India will pay a Special Surrender Value to the policyholder, which will either be equal to the guaranteed surrender value of more than the guaranteed surrender value. 

This Special Surrender Value will depend upon the period for which the premiums have been paid and also the term of the policy at the time of surrender.

Either the Guaranteed Surrender value or the Special Surrender Value, whichever is higher will be paid by the Company at the time of surrender of the policy.

Below is the list of top 5 banks and other financial institutions that provide personal loan against life insurance:

SBI  Loan Against LIC Policy

• Eligibility: Salaried employees, central/state government/armed forces pensioners, self-employed businessmen and professionals with a regular source of income.
• Purpose: The loan against LIC policy in SBI can be used for marriage, medical treatment, education, foreign travel or any other general purpose.
• Quantum of loan: Up to 95% of the surrender value of the policy. 
• Margin: 5% of the surrender value.  
• Interest: The interest rate of LIC loan in SBI starts from 11.90% p.a. 
• Processing fee: Nil.
• Documents required: Original policy document, income proof, and address proof.

Bank of Baroda Loan Against LIC Policy

• Eligibility: All resident Indians above 18 years are eligible for BoB LIC loan scheme.
• Nature of facility: Term Loan and Overdraft.
• Purpose: This loan against life insurance policy comes with no restriction on end use.
• Quantum of loan: Minimum quantum for Term Loan is Rs. 3,000 and for Overdraft is Rs. 20,000, depending on the surrender value of the policy.
• Margin: It is 15% of the surrender value if the insurance policy is maturing within three years. 20% of the surrender value if the residual maturity period is three years and above.
• Repayment: The loan amount along with interest to be repaid within 60 months.
• Interest: Bank of Baroda LIC loan against policy interest rate 2020 ranges between 10.50% to 11% p.a.
• Processing fee: Nil for existing staff or ex staff of the bank and Rs. 500 for others.
• Documents required: You have to submit the original policy document along with income proof and address proof.

HDFC Bank Loan Against LIC Policy

• Eligibility: Resident Indians, NRIs, owner of a sole proprietorship/ partnership firm/ private trust/ private limited company/ public limited company above 18 years are eligible for the loan.
• Nature of facility: Overdraft.
• Quantum of loan: Loan amount up to 80% of the surrender value of the policy is sanctioned with a minimum of Rs. 50,000.
• Margin: It is 20% of the surrender value of the policy
• Repayment: Only overdraft facility is provided. Hence, it will be revolving by nature and will be reviewed every year. Renewal of the limit is at the discretion of the branch.
• Interest: HDFC LIC policy loan interest will be linked to MCLR and is as applicable from time to time. Interest will be collected only to the extent of the amount utilised. 
• Annual maintenance charge: Up to 0.50% of the limit sanctioned with a minimum of Rs. 2,500 and maximum of Rs. 5,000. 
• Processing fee: Up to 1% of the loan, minimum Rs. 5,000 (non refundable).
• Prepayment charges: Up to Rs. 1,000
• Documents: Address proof, income proof, the original policy of the document, and premium paid receipt.

Axis Bank Loan Against LIC Policy

• Eligibility: All resident Indians above 18 years of age are eligible for this loan against LIC policy.
• Nature of facility: Overdraft facility. On approval of the limit, an overdraft limit will be fixed for the current account of the borrower maintained with the bank.
• Quantum of loan: Maximum up to 85% (75% for overdraft facility) of the surrender value of the policy.
• Margin: It is 15% of the surrender value of the policy.
• Repayment: LIC loan repayment is done through an overdraft facility which is revolving by nature. Eligible for review every year. Renewal of the limit is at the discretion of the bank.
• Interest: Axis Bank LIC loan against policy interest rate varies between 10.50% and 12.75% p.a. and charged only to the extent of the amount withdrawn from the account.
• Processing fee: Processing fee of 0.15% of the loan amount or Rs. 1,000 + GST whichever is higher, and renewal fee of Rs. 1,000 + GST will be collected.
• Prepayment charges: Nil.
• Documents: Address proof, income proof, original policy document, and a premium paid receipt.

Bajaj Finserv Loan Against Insurance Policy

• Eligibility: All salaried and self-employed resident Indians aged 18 years or above and having a regular source of income can apply.
• Nature of facility: Overdraft facility. 
• Quantum of loan: Minimum Rs. 10 Lakhs to maximum up to Rs. 10 Crores.
• Purpose: Funding all personal and investment needs.
• Margin: Up to 50% of the surrender value of the policy
• Repayment: The loan can be repaid within 12 months tenure.
• Interest: Bajaj Finserv LIC policy loan interest rate 2021 is calculated on a daily basis on the outstanding loan amount.
• Prepayment charges: Nil part prepayment and foreclosure charges are levied.
• Documents: Identity proof, address proof, document proof for LIC policy, and a passport size photograph.