As of now, whenever you need the Loan Against LIC Policy, then you have to apply it by visiting your service branch. However, now LIC started the online process of applying for Loan Against LIC Policy.
To avail the loan you have to visit the servicing branch and avail the loan by submitting few forms. It is a cumbersome process if the person is not staying in the same locality.
However, recently LIC started the facility to apply or avail Loan Against LIC Policy online. Before jumping into this, let us find out the loan features of LIC policies.
# The maximum loan amount available under the policy is 90% of the Surrender Value of the policy (85% in case of paid up policies) including cash value of the bonus.
# All policies are not eligible for loans (like term life insurance). Hence, you have to check the eligibility of that (usually mentioned in policy bond).
# Interest on the loan is payable half yearly.
# The minimum period for which a loan can be granted is six months from the date of its payment. If repayment of the loan is desired within this period the interest for the minimum period of six months will have to be paid.
# In case the policy becomes a claim either by maturity or death within 6 months from the date of loan interest will be charged only up to the date of maturity/death.
# You repay the loan with interest or continue paying only the interest and allow the loan principal to be deducted at the time of the claim payments.
# To avail loan, you must be paid the premium for at least 3 years.
# You have to assign the policy to LIC as security and they keep the original bond with them.
# If you do not pay interest amount within 30 days from the due date, LIC reserves the right to foreclose the policy and settle the loan amount against the proceeds. However, such foreclosure not applies for fully paid up or for the in force policies.
# The first payment of interest is to be made on the next policy anniversary or on the date of 6 months before the next policy anniversary, whichever is earlier. After that, for every half year, you have to pay the interest.
# You can avail the second loan against the same policy while the first loan has the not been repaid. However, the cap of 90% of Surrender value shall apply to the combined amount.
# You can avail the loan against LIC policy from other banking institutes also (like banks). However, the quantum of loan availability may be less and also they may charger higher interest rate than the LIC.
As I stated above, recently LIC started the online facility to avail Loan Against LIC Policy. Along with this, you can even repay your interest or principal part of the loan using the online platform.
The steps are here as below.
# Visit the LIC’s Homepage. Click on “Online Loan” tab, which is available under “Online Services”.
# Once you click the tab “Online Loan”, then you will be re-directed to another page. Here, you have two options. One is to repay interest or principal online (both with or without registration) and another is to request for the loan using your login.
As I told above, to request for an online loan, you must be a registered customer of LIC. However, to repay interest and principal, you either can pay with or without login.
Also, in my view, to avail the loan facility online, you must be updated your bank details. If you have updated then the loan amount will be directly credited to your bank account.
# Quick access in case of emergencies.
# Now with this online facility of the loan facility, I think the process is more simplified than the earlier physical visit to the home branch.
# Interest rate is usually cheaper than your personal loan interest rate.
# Flexibility to repay only interest dues and principal at any point of time but before maturity. This flexibility is not with personal loan.
# You are pledging only policy document as a proof. However, in case of other loans, the loan eligibility depends on your credit score and the asset you pledge.
# Limited to surrender value makes it less worthy when you actually in need of more loan. Because as I said above, the quantum of loan depends on surrender value. This surrender value usually is LESS during the initial years of the policy period. As the policy is about to close, this surrender value increases and so as your loan eligibility also.
# No Tax Benefits while repaying either principal or interest.
# You may end up less insured in case of your untimely death. Because if the loan is pending and the insured died means the nominee will receive the Life Insurance benefits LESS of the existing loan principal and interest.
Conclusion-I am not the fan of LIC traditional plans due to less insurance coverage and less returns for the long run. However, this loan against LIC policy feature will be handy to those who have emergencies. Also, it is best to go for the loan against LIC policy than going for the personal loan.
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View Comments
Hello , I tried to avail Loan from LIC portal against my LIC policies , It say none of your policies are eligible for Loan . My all policies are "Fully Paidup" , I think that may be the reason . I want to know how can I get loan against my Fully Paidup policies ?
Thanks ,
Ajit
Dear Ajit,
For taking loan, your policies should be active.
Sir, I had taken 650000 as a loan from lic against my single endowment policy I was eligible to take 1125000 however I didn't needed that much money at that time but I am in a need of more money now can I reapply for rest of it.. or I will have to make payment for the first one??
Dear Prasun,
You can apply now.
Dear sir ..
I have taken loan six months back and my total outstanding to pay back is 10000 and i want to take second loan so,i should visit again to branch for submission of documents already my bank account details and my bond is surrendered to the home branch
Dear Sravangubba,
Yes, you have to visit the branch.
I repaid a part of my loan today. I want to repay the remaining part now , but the online portal is telling me I can't . what should I do? as my PAN card is not submitted I was not allowed to repay more than 50000 . So I decided to do it in 2 parts .
Dear Niranjan,
Better to visit the branch.
Hi, I applied for loan on my policy online. After that it asking me to submit neft form and application form by hand in any nearest lic branch. Is that correct or do I have to submit in the branch where my policy taken? Please let me know.
Dear Ram,
It is better to submit it to the home branch.
Dear hari my outstanding is 52k still it is showing 2000 as interest but when i go through only interest payment option it is showing exact interest amount . When i called customer care they said that there is a mistake in that software it always shows some round figure value 2000.He advised me first to pay interest only and then principal it will show zero there after paying the interest you can pay the principal amount .
Hello Sir,
Is it a good idea to take a loan against my lic policy and then won't pay it because I want to surrender my policy anyway but surrender process is cumbersome.
Dear Abhishek,
Surrender process is simple. Please visit the concerned branch.
Sir I have applied for lic policy loan online, but I can't go lic office in four working days , may I again apply for lic policy loan online.
Dear Harish,
Try your luck.
Hi,
My present principal outstanding is 70K. Loan was taken on 9th Nov 2018.
If I am trying to pay full 70K, I have to pay 2000 as interest.
If I am trying to do partial payment of 40k, I have to pay 2500 as interest.
If I am trying to do partial payment of 10K, I have to pay 1600 as interest.
If I am trying to do partial payment of 5K, I have to pay 1400 as interest.
It seems that doing partial payment is loss. Can you please throw light on this?
Regards,
Hari
Dear Hari,
Common sense-If you pay your outstanding then you will be always in a better position.
Sir, I want to apply the loan against the LIC policy but I have the photocopy of bond? Can i apply the loan without oiginal bond?
Dear Rahul,
You need to submit the original bond. If it is lost, then first apply for duplicate bond and once you receive it, then go for loan.