How to get loan against LIC policy online or offline, and what is its interest rate, know everything here

Apart from insurance plans, Life Insurance Corporation of India (LIC) offers personal loans against its insurance plans.

This loan can be taken for expenses like travel, higher education, medical emergency, wedding, home repairs etc. This loan against policy is a secured loan as your insurance policy is pledged as security, in case the applicant is unable to pay the loan, LIC can retain the insurance policy amount.Also Read:Are you also not getting subsidy on LPG, check if this is the reason

Loan Interest Rates on LIC Policy

Life Insurance Corporation of India (LIC) is not the only bank that offers loan against LIC or other life insurance policies. Some other banks and NBFCs also do this. Their interest rates* are:

* While life insurance policies provided by LIC are accepted by most of the banks mentioned above, in some cases, insurance policies provided by other private insurers are also accepted subject to the applicable terms and conditions.

LIC Personal Loan Eligibility Conditions

Following are some of the important eligibility conditions that the applicant has to fulfill in order to avail loan against LIC policy:

• Applicant must be an Indian resident
• Applicant’s minimum age should be 18 years
• Applicant must have a valid LIC (or other life insurance) policy
• The LIC policy used for availing the loan should have surrender value (Term plan is not eligible)
• LIC premiums must have been paid in full for at least 3 years
• The policy should be completely handed over in favor of LIC

Presently the term plans provided by LIC cannot be used as security/guarantee for availing this secured personal loan as they do not have a guaranteed surrender value. Following are some of the popular LIC policies that can be pledged against LIC policy loan:Also ReadLIC Premium Payment Online: How to pay lic premium bill online by credit and debit card

• Life progress
• Life benefits
• Single-Premium Endowment Plan
• New Endowment Plan
• Newjeevan Anand
• Life-saving
• Limited Premium Endowment Plan
• Life goal

How to Apply for Loan Against LIC Policy

At present you can apply for loan against LIC policy using offline or online mode:

Offline :

You visit the nearest LIC office and fill the loan application form along with applicable KYC documents and submit along with the original policy document. Once the application details are verified, a loan of up to 90% of the surrender value of the policy is given.Also Read:SBI, BOB, ICICI, HDFC Bank senior citizens special fd schemes latest interest rates, check all details

Online :

If you have registered for LIC e-services, you can login to your online account and you can check whether your insurance policy is eligible to avail loan against LIC policy. If it is, the terms and conditions, interest rates and other loan features will be shown to you online. On submission of the application you may need to upload the KYC documents or send them to the nearest LIC office to make your loan application.Also Read:Domestic Flights: Government’s big decision, now air travel is going to be expensive, know how much the fare will increase?

LIC Policy Loan: Documents Required

• Following is the list of documents required for LIC policy loan:
• original policy document
• Identity Proof: Aadhar Card , Voter ID Card, Passport
• Residence Proof: Aadhar Card, Voter ID, Driving License, Utility Bill
• Income proof: Salary slip, Bank account statement
• Assignment agreement

Registration Process in LIC E-Services

Following are the steps to be followed for registration on the following LIC eServices portal:

Step 1 : Go to the LIC e-Sewa portal and click on “Don’t Have an Account? Click on “Sign Up” option:

Step 2: Enter the details to sign-up for LIC services online:

Step 3 : After clicking on “Proceed” , you can complete the registration process by creating a password of your choice. You either create a User ID or use your email/mobile to log in to your account.

How to login?

To login to the LIC eServices portal the following procedure has to be completed:

Step 1: Visit the LIC eServices portal and provide your User ID/email or phone number and password to login to your account.

Step 2 : On successful login, you can check the policy information as well as the e-services offered by LIC.

How to pay loan LIC policy?

To make your LIC policy loan EMI online, you need to login to the e-Seva portal and then select the “loan details” option. Next, you will see the current details of your outstanding loan such as outstanding EMI, loan repayment schedule, outstanding loan principal amount, etc. You can pay the loan EMI online using a credit card , debit card or internet banking from major Indian banks .Also Read:How to merge two UAN of different epf accounts at epfo portal in minutes, epfo step by step process

LIC loan payment schedule

The minimum tenure for which LIC loan can be given is 6 months. Even if a long term loan is prepaid, the minimum period beyond which prepayment can be done is 6 months. The repayment schedule is provided to the borrower at the time of transferring the loan amount and can also be accessed online in the LIC eServices portal.

In case of policy maturity / death of the borrower before the completion of 6 months, the proceeds of the policy will be used to settle the loan and interest will be charged only for the period when the loan was outstanding.Also Read:LIC Saral Pension: One-time premium will get Rs 12000 per month pension, know its benefits

You can follow the following procedures for loan repayment:

• Pay interest along with principal amount
• Pay interest for a few years and repay the principal amount when you have extra cash
• Only interest and principal amount can be paid on maturity along with the claim amount.

LIC Policy Loan Limits

Under the extant rules, the maximum loan amount sanctioned in case of loan against LIC policy is up to 90% of the surrender value of the policy at the time of application. In case of paid-up plans, this limit is less than 85% of the policy surrender value. In both the cases, this surrender value is used as security.

LIC Policy Loan: Terms and Conditions

• The loan interest amount has to be paid twice in a year, i.e. half-yearly.
• LIC only gives loans up to 90% of the surrender value of the policy (the existing amount in the fund after three years of inception).
• The minimum tenure for LIC Personal Loan is 6 months.
• To make the loan payment before the end of the tenure, the borrower needs to pay at least 6 EMIs.
• If the insurance policy matures before the loan expires, LIC will deduct the remaining loan amount.
• In case of death of the policy holder, interest will have to be paid till the date of death.
• Loan terms and conditions vary from loan to loan.
• Only LIC policyholders can avail the loan.

Features of Loan Against LIC Policy

• The loan is valid for LIC policyholder only.
• The loan amount is dependent on the surrender value of the plan (the existing amount in the fund after three years from the commencement of the insurance).
• The insurance policy is kept by LIC as a security. Hence, the insurance company
  can retain the policy in case of non- payment of the loan by the applicant .
• Not all insurance policies by LIC have this facility. Hence, it is important to choose the right policy so that the applicant can avail the loan without any inconvenience
• The rate of interest on the loan is usually between 9-11%.
• The loan amount depends on the value of the LIC policy. Usually, the loan amount goes up to 90% of the policy value.
• If the loan amount exceeds the surrender value, LIC will terminate the policy.
• If the policy matures before the loan is repaid, LIC will deduct the loan amount from the policy amount.
• Once the loan is granted, LIC will have full control over your insurance policy.

LIC Personal Loan – Benefits

Low Interest Rate: The interest rate offered by LIC against LIC insurance plan is low as compared to other banks. LIC offers an interest rate of 9% to 11% on the loan. In addition, the interest on the loan has to be paid half-yearly i.e. twice in a year.

Loan Amount: The maximum loan amount that can be availed depends on the value of the policy.

No Credit Score Required: If you have low credit score or no credit score, you can still avail this loan against LIC policy.

Easy Processing: The loan application is processed faster as it involves less formalities and the amount is transferred to the account without any hassle.

Low Processing Fees and Prepayment Fees: Unlike other banks, LIC charges a low processing fee or zero processing fee for lending. Also, there is no prepayment fee for repaying the loan amount before the end of the loan tenure.

Easy Payment: Most of the banks allow EMI for loan payment. But LIC has two options for its customers to pay the loan, if they want, they can pay the principal amount and interest together and if they want, they can pay the principal amount and interest separately.

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