Loan Against LIC Policy 2025

The eligibility criteria to borrow a loan against one's LIC life insurance policy are as follow:

1. The individual should own an LIC life insurance policy.
2. The policy should not be a term insurance policy or unit-linked insurance plan (ULIP).
3. The policy should have acquired a surrender value.
4. The individual should be a citizen of India.

*Note: Any other conditions that are specified by the lender will have to be met for you to be able to borrow a loan against your LIC policy.

Features and Benefits of Loan Against LIC Policy

Some of the key features of borrowing a loan against your LIC life insurance policy are as follows:

1. This facility of taking a loan against a life insurance policy is provided to individuals, partnerships, Hindu Undivided Families (HUFs), companies, and sole proprietorships.
2. You can borrow a loan against the surrender value of your policy, and not the sum assured of your policy. In most cases, you will only be able to borrow up to 80% of the policy's surrender value.
3. You can apply for a loan against your LIC policy through online channels.
4. To successfully borrow a loan against your life insurance policy, you will need to submit a deed of assignment, which will assign the rights of your policy in favour of the lender.
5. You can borrow high value loans with your LIC life insurance policy since the amount that you can borrow is subject to your policy's surrender value.
6. You can track your loan details through online and offline channels.
7. Most lenders will only charge interest on the sum that you borrow. Interest will not be charged on the entire loan amount.

How to Avail a Loan Against LIC Policy?

If you are eligible to take a loan against your LIC policy, you will need to do as follows to borrow a loan:

1. Visit the nearest branch of a bank.
2. Fill-up the loan application form and submit to the lender's representatives with the required documents.
3. Existing customers of the bank will need to submit minimal documents.
4. The lender will verify the documents submitted by you, after which your application will be approved.
5. If approved, the loan amount will be disbursed into your savings bank account.

LIC Policy Loan Interest Rate

Depending on the lender, the interest rate that will be levied will vary.

Documents Required to Borrow a Loan Against an LIC Policy

A few documents that you will need to submit when borrowing a loan against your LIC life insurance policy are as follows:

1. Original policy document
2. Proof of identity
3. Proof of residence
4. Proof of income
5. Deed of assignment

Top Alternatives to Loan Against LIC Policy

There are other options for availing personal finance, other than loan against your LIC policy:

• Independent personal loan from banks and financial institutions, with higher rate of interest but more features, lesser restrictions of loan amount and more benefits.
• Personal Loan against Credit Card, which are more viable as an option in terms of lower interest rates and the repayment can be made through the monthly credit card bill cycle through EMIs.
• Other Life insurance providers also offer loan against their life insurance products although it is suggested not to take a loan against a ULIP as it has some risk factors involved.

LIC Loan Repayment

You will need to pay interest on the loan amount that you utilise at least twice in a given year. The principal can be repaid at the completion of the loan tenure or can be adjusted from payouts that you or your nominee may be eligible to receive via the policy.

If you have an LIC policy, borrowing a loan against your policy may be a better option borrowing other types of loans. That said, ensure that you familiarise yourself with the various terms and conditions of the loan before you submit the application form for the same.

Types of Policies Against Which You Can Borrow a Loan

Individuals who have purchased a term insurance policy from LIC will not be able to borrow a loan against the policy. Also, as per recent regulations, you also cannot borrow a personal loan against a unit-linked insurance plan (ULIPs).

You can, however, borrow loans against traditional policies such as money-back plans, whole life insurance plans, and endowment plans. That said, keep in mind that you cannot apply for a loan as soon as you purchase an LIC life insurance policy. You will need to wait until the policy acquires a surrender value, which will happen only after you have paid the due premiums for around 3 years.

Loan Details for LIC Endowment Plans

LIC Bima Jyoti: Policy Overview for Loan Borrowing

Eligibility: To avail loan against LIC’s Bima Jyoti, policyholders should have paid premiums for at least two years.

Maximum loan amount:

1. For in-force policies: Up to 90% of Surrender Value
2. For paid-up policies: Up to 80% of Surrender Value

Interest Rate: Up to (10-year G-Sec Rate* + 3%). Interest is compounded on a half-yearly basis.

LIC Jeevan Lakshay: Policy Overview for Loan Borrowing

Eligibility: Premiums must be paid for at least two years to qualify for a loan against this policy.

Maximum Loan Amount:

1. For active (in-force) policies: Up to 90% of the surrender value.
2. For paid-up policies: Up to 80% of the surrender value.

Interest Rate: Determined based on the method approved by IRDAI.

LIC Jeevan Labh: Policy Overview for Loan Borrowing

Eligibility: Policyholders must have paid premiums for a minimum of two years to avail a loan against this policy.

Maximum Loan Amount:

1. For active (in-force) policies: Up to 90% of the surrender value.
2. For paid-up policies: Up to 80% of the surrender value.

Interest Rate: Determined based on the method approved by IRDAI.

LIC Aadhaar Stambh: Policy Overview for Loan Borrowing

Eligibility: At least two years of premiums must be paid to be eligible for a loan against this policy.

Maximum Loan Amount:

1. For active (in-force) policies: Up to 90% of the surrender value.

1. For paid-up policies: Up to 80% of the surrender value.

Interest Rate: The higher of (10-year G-Sec Rate* + 3%) or the yield earned on the Corporation’s Non-Linked Fund + 1%.

LIC Aadhaar Shila: Policy Overview for Loan Borrowing

Eligibility: Policyholders must pay premiums for at least two years to qualify for a loan against this policy.

Maximum Loan Amount:

1. For active (in-force) policies: Up to 90% of the surrender value.
2. For paid-up policies: Up to 80% of the surrender value.

Interest Rate: The higher of (10-year G-Sec Rate* + 3%) or the yield earned on the Corporation’s Non-Linked Fund + 1%.

A good credit score can help you secure lower interest rates on loans and credit cards.

Get Free Credit Score