When you approach a bank or a non-banking finance company (NBFC) for a personal loan, they offer you the loan at a high interest rate and also check your CIBIL score. But if you have a LIC policy, you don’t need to worry about a high interest rate or a poor Cibil score. You can take a loan against your LIC policy. Know how!
Loan Against LIC Policy: To meet the sudden need of money, people either take the help of a close friend or opt for a personal loan.
In personal loan, while you need to submit documents, your CIBIL score should also be high to get the personal loan at a lower intrest rate.
If it is poor, you get the personal loan at a high interest rate and end up paying heavy interest on principal.
But if you a LIC policy in your name, you also have a better option of loan as you can take a loan against this policy.
The good thing about this loan is that it does not affect your CIBIL score.
Apart from that, the interest rate is also lower than personal loans. In this write-up, we will also tell you about its other conditions and benefits.
Eligibility for taking loan against LIC Policy
This loan, taken against the policy, is a secured loan because during this, your insurance policy is mortgaged as security.
The condition for taking the loan is that you should have a LIC policy.
You must be at least 18 years of age and have been paying the annual premium for that policy for at least 3 years.
Only after this, you will be eligible to take that loan.
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How much amount is available as loan
The amount of loan you will be offered depends on the surrender value of the LIC policy.
If an insured surrenders the policy before its maturity, the insurance company returns a fixed value to him, which is called the surrender value.
Typically, the loan amount is up to 90 per cent of the policy value.
For paid-up policies, this amount is up to 85 per cent of the policy value.
The interest rate on this loan can be up to 10-13 per cent, which is lower than a personal loan.
Installments can be paid as per convenience
One advantage of the loan against LIC policy is that you do not have to worry about paying EMI every month.
You can pay the installments at your own convenience.
But interest will keep getting added to it.
However, if you do not repay the loan, then on maturity of your policy, the loan amount is deducted along with the interest and the remaining money is given to you.
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How to apply for loan against LIC policy
To take loan against the LIC policy, you can apply both online and offline.
For offline, you will have to go to LIC office and apply for loan along with KYC documents.
To apply online, register for LIC e-services.
After this, log in to your account.
After this, check whether you are eligible to get the loan to exchange your insurance policy or not.
If yes, then read carefully about the loan terms, conditions, interest rates, etc. After this, submit the application and upload the KYC documents online.
The amount of loan you will be offered depends on the surrender value of the LIC policy.
If an insured surrenders the policy before its maturity, the insurance company returns a fixed value to him, which is called the surrender value.
Typically, the loan amount is up to 90 per cent of the policy value.
For paid-up policies, this amount is up to 85 per cent of the policy value.
The interest rate on this loan can be up to 10-13 per cent, which is lower than a personal loan.
Installments can be paid as per convenience
One advantage of the loan against LIC policy is that you do not have to worry about paying EMI every month.
You can pay the installments at your own convenience.
But interest will keep getting added to it.
However, if you do not repay the loan, then on maturity of your policy, the loan amount is deducted along with the interest and the remaining money is given to you.
