Loan Against LIC Policy

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If you have a policy with the Life Insurance Corporation of India (LIC), you can use it to get quick financing. A loan against an LIC policy is secured credit that you can get by pledging your insurance.

Such a loan provides you with funds even if you have a low credit score, so you can manage an emergency with ease.

Understanding a Loan Against an LIC Policy

It is a type of personal loan where your LIC policy is the collateral. Depending on your policy type and premium amount, you can get up to 90% of your surrender value as a loan.

One of the key features of this loan is that its interest rate is nominal compared to others. Starting at just 9%, the interest for loans against an LIC policy compounds only twice a year. This makes it an affordable solution, allowing you to meet your financial requirements conveniently.

Features of a Loan Against an LIC Policy

Here is an overview of the attractive features and benefits of LIC personal loans.

Loan Amount	Up to 90% of the policy’s surrender value and not the sum assured of the LIC policy
Interest Rate	Starts from 9% per annum; will be charged only on the sum that is borrowed and not on the entire loan amount
Minimum Tenure	6 months from the date of payment
Pre-payment Charges	Nil
Foreclosure Charges	Nil

Disclaimer: The above details are subject to market conditions and the lender’s discretion.

Interest Rates Offered by Banks and NBFCs for Loans Against LIC Policy

The interest rates for a loan against a LIC policy are lower than regular personal loans. Here is a comparison of interest rates and other loan details from some top lenders:

Lender	Interest Rate	Key Details
Life Insurance Corporation of India	9.00% onwards	Maximum Loan Amount: 90% of the policy value Maximum Tenure: Up to 5 years Processing Fee: Up to 1% of the loan amount
SBI	11.45% onwards	Maximum Loan Amount: ₹35 Lakhs Maximum Tenure: 3 years Processing Fee: Up to 1% of the loan amount
HDFC Bank	10.75% onwards	Maximum Loan Amount: ₹40 Lakhs Maximum Tenure: 6 years Processing Fee: Up to ₹4,999 + GST
ICICI Bank	10.85% onwards	Maximum Loan Amount: ₹50 Lakhs Maximum Tenure: 6 years Processing Fee: Up to ₹2% loan amount
Axis Bank	10.25% onwards	Maximum Loan Amount: ₹40 Lakhs Maximum Tenure: 7 years Processing Fee: Up to ₹2% loan amount
Punjab National Bank	11.40% onwards	Maximum Loan Amount: ₹20 Lakhs Maximum Tenure: 7 years Processing Fee: Up to 0.35% of the loan amount
IndusInd Bank	10.49% onwards	Maximum Loan Amount: ₹50 Lakhs Maximum Tenure: 6 years Processing Fee: Up to 3.5% of the loan amount
Kotak Mahindra Bank	10.99% onwards	Maximum Loan Amount: ₹35 Lakhs Maximum Tenure: 6 years Processing Fee: Up to 3% of the loan amount

Disclaimer: Interest rates and charges are subject to market conditions and financial institutions’ discretion.

Eligibility Criteria & Documents Required for a Loan Against LIC Policy

You have to fulfil the below-mentioned LIC personal loan eligibility criteria to qualify for a loan.

You need to be a citizen of India
You need to be at least 18 years old
You need to own a life insurance policy
You need to have paid the premium of the policy for at least 3 years
You should not be holder of a Term Insurance Policy or Unit-Linked Insurance Plan (ULIP)

Here is the complete list of required documents to get a LIC of India personal loan.

Original LIC policy document
Proof of residence, such as a Passport, Voter ID card, Driving license, postpaid utility bills like gas bills, electricity bills, etc.
Proof of identity like an Aadhaar Card, PAN card, Passport, Voters ID card, or Driving license
Proof of income, including salary slips for the last 3 months or bank Statement for the last 3 months with income details
Deed of assignment

Loan-related Details of LIC Endowment Plans

These are popular insurance products that offer a combination of life coverage and investment benefits. Check out the features of loans against these plans below:

Particulars	Parameter
Name of the Policy	LIC’s Single Premium Endowment Plan
Maximum Loan Amount	90% of the ongoing policy and 80% of the paid-up policies
Eligibility	You need to have paid the premium for the policy for at least 2 years
Rate of Interest	The interest rate is disclosed to you when you apply for the plans. It is calculated on the basis of the IRDAI-approved method

Loan-related Details of Whole Life Plans

These plans ensure financial protection for your loved ones throughout your lifetime. Here are the details of the loan you can get against these plans:

Particulars	Parameter
Name of the Policy	LIC's Jeevan Utsav
Maximum Loan Amount	Up to 70% of the surrender value or 50% of the policy value in case of paid-up policies
Eligibility	You need to have paid the premium for the policy for at least 2 years
Rate of Interest	Not exceeding the 10-year G-Sec (government security) Rate p.a. + 3% compounding half-yearly

Loan-related Details of Money Back Schemes

These are a popular type of life insurance policy offering regular payouts during the term. The following are the features of loans available against these plans:

Particulars	Parameter
Name of the Policy	LIC’s Money Back Plan – 20 Years
Maximum Loan Amount	Up to 80% of the total premium amount
Eligibility	You need to have paid the premium for the policy for at least 3 years
Rate of Interest	Based on the method approved by the IRDAI

Loan-related Details of Pension Plans

These provide financial security during retirement. They also offer the option to borrow against the accumulated funds, and here are some of the features of such loans:

Particulars	Parameter
Name of the Policy	LIC Saral Pension
Maximum Loan Amount	Calculated in a way that the annual interest amount is under 50% of the annuity paid on the policy
Eligibility	Any time after 6 months from the commencement date of the policy
Rate of Interest	Not exceeding the 10-year G-Sec Rate p.a. + 2% compounding half-yearly

How to Apply for an LIC Personal Loan

You can apply for a LIC Personal Loan online and offline. Before that, it is important to ensure whether you are eligible for a LIC policy loan or not. Follow the below-mentioned steps to check your eligibility:

Login to your LIC account by visiting the official website
Download and fill the Form 5196
Submit Form 5196 to your policy agent
The policy agent shall follow up with the respective LIC office for further proceedings

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The information and suggestions provided by BFDL hereinabove is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial advice or endorsement of any sort.

The information including interest rates or fees, loan amount and other charges with regard to any product, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks or NBFCs. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any application or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products.

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What is the maximum loan amount that can be sanctioned by LIC?

The maximum loan amount that can be sanctioned by LIC will be 90% of the policy’s surrender value.

Is there an age limit to apply for an LIC Loan?

Yes, there is. You need to be at least 18 years of age to get this loan.

How much time does it take for the LIC Personal Loan to be approved?

When a personal loan is availed against an insurance policy, it may take 3-5 days for LIC Personal Loan approval.

How can I calculate LIC Personal Loan EMI?

You can calculate the EMI using an LIC Personal Loan EMI calculator available online. All you need to do is enter the loan amount, interest rates, and tenure to get an estimate.