Life Insurance Corporation of India, the largest insurer in the country, offers a wide range of life insurance schemes to meet the needs of customers across all income categories. The life insurance policies offer the dual benefit of insurance coverage and wealth accumulation. Apart from these, many LIC policies can be used as collateral to avail loans.
At times, you may need urgent funds, and your LIC policy could be helpful to access funds quickly. You can avail a loan against your LIC policy for certain kinds of plans. Currently, you can apply for a LIC policy loan both online and offline.
Here are the key factors to consider before opting for a loan against an LIC policy.
LIC Policy Loan Eligibility
Each LIC policy is designed to cater to different financial needs and goals. So, all LIC policies are not eligible for loans. You can take a loan only if you have an endowment LIC policy. An endowment policy is a type of life insurance plan that provides both insurance coverage and a savings option.
To take a loan against an LIC policy, you must have paid premiums for at least three years and it should have a surrender value. The exact loan amount depends on the type of policy, total premiums paid and how long the policy has been in force. LIC generally offers up to 85% to 90% of the surrender value as the overall loan amount.
Repayment Tenure
The terms of loan repayment are flexible. The loan can be repaid at any point prior to the policy’s maturity. In the event that the policyholder defaults, LIC will deduct the interest and remaining balance from the maturity benefit or claim settlement amount.
However, the policy may lapse and the policyholder may no longer enjoy the insurance coverage if the loan and interest dues surpass the surrender value.
How To Apply For Loan Against LIC Policy
You can apply for a loan against an LIC policy either online or offline.
Apply for a loan against an LIC policy online:
· Go to the LIC customer portal or the app.
· Log in using your username and password.
· Select the “Online loan request” option.
· Choose your eligibility policy.
· Choose the LIC policy and the loan amount.
· Submit the request.
· Once approved, the loan amount will be credited to your bank account.
Apply for a loan against an LIC policy offline:
· Visit the nearest LIC branch.
· Submit the documents, such as the LIC policy bond, photo ID proof, loan form and a cancelled cheque.
· Submit the form and documents.
· After verification, LIC will approve and disburse the loan amount.
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