Loan Against Lic Policy 2023: How to Take Loan on Lic Policy

Loan Against Lic Policy: LIC offer a good solution for individuals facing financial need in emergencies without any assets.

Loan Against Lic Policy

Loan Against Lic Policy 2023 : How to Take Loan on Lic Policy

By leveraging their LIC insurance policy, individual can access credit facilities to meet their financial needs. This option comes with various features and benefits, including competitive interest rates and convenient online application processes.

Eligibility criteria and necessary documentation are also covered, along with the loan repayment policy. In summary, loans against LIC policies can be a lifeline during unforeseen financial challenges.

What is loan against lic policy?

A loan against LIC policy refers to a secured loan provided to policyholders using their policy’s surrender value as collateral. By depositing their life insurance policy, individuals can access this loan at favorable interest rates to fulfill their financial needs. It offers a convenient way to meet financial requirements while leveraging the benefits of the insurance policy.

Loan repayment policy

The loan repayment policy for loans against LIC policies differs from the conventional approach. Unlike the typical six-month or maturity period repayment structure, LIC offers a unique system. Borrowers are not required to pay back the loan through EMIs, making the repayment process more manageable.

The policy entails the following features:

  • Loan interest, along with the principal amount, can be paid online.
  • During the loan tenure, borrowers have the option to pay only the interest, while the principal amount can be settled upon maturity.
  • Borrowers have the flexibility to repay the principal amount when they have sufficient funds after paying off a few years’ worth of interest.

This repayment policy provides borrowers with more control and convenience in managing their loan obligations.

LIC policy loan repayment can be done online through LIC Pay Direct app, making the process more convenient for policyholders. Here’s how you can make LIC loan repayment online using the LIC Pay Direct app:

  • Visit the Google Play Store and search for the LIC Pay Direct app. Install the app and open it.
  • Select “Loan Repayment” after opening the app.
  • Click on “Please Select” option and then click on option “Loan Repayment.”
  • Click on “Done” and proceed by clicking on the “Proceed” button.
  • Provide your policy details, including Policy Number, Installment Premium (without GST), Date of Birth, Email ID, and Mobile Number.
  • The app will display the repayment amount and other relevant information.
  • Finally, make the payment using your debit card, credit card, internet banking, or UPI.

By following these steps, you can easily and securely repay your LIC policy loan online using the LIC Pay Direct app.

Login Process of Loan against LIC Policy Portal

To apply for a LIC personal loan online through the Loan against LIC Policy portal, follow the registration and login process outlined below:

  • Visit the LIC website’s home page and click on the “Customer Portal.”
  • Click on “New User” for registration, while already registered users can directly log in.
  • To register for the Loan against LIC Policy portal, go to “Service Registration” -> “Service Request” -> “Premier Services Registration.”
  • Download the auto-generated form and print it.
  • Sign the printed form and scan it.
  • Upload the scanned form on the portal, along with a scanned copy of your PAN/Aadhaar/Passport for identification.
  • During login, provide your LIC policy loan details and personal information, such as PAN number, Aadhaar number, or Passport details, which should match the details mentioned in the policy.
  • After successful registration, log into the LIC customer portal.
  • The portal can also be used to track the status of your LIC policy loan.

Features of Loan Against LIC Policy

Here are the key features and benefits of Loan Against LIC Policy:

  • The loan amount can be up to 90% of the surrender value of the policy.
  • Surrender value is the amount given to the policyholder if the policy is surrendered before maturity.
  • For an endowment policy, surrender value is available after paying premiums for 3 years, amounting to 30% of the basic premiums paid (excluding the first year premium).
  • Premiums for riders like accidental death benefit are not considered in the calculation.
  • The loan repayment period cannot be less than 6 months.
  • If a claim occurs due to policy maturity or the death of the policyholder within 6 months from the loan date, interest will be calculated only until the maturity/death date.
  • The policy is assigned to LIC, and LIC holds the rights of claim until the loan is cleared.
  • Availing a loan against LIC policy is beneficial for those with long-term endowment policies, as it provides a lower interest rate compared to Personal Loans from banks.
  • The loan application process has been simplified with online availability, reducing processing and disbursal time.
  • Only the original LIC policy is required, minimizing document submission.
  • A good credit score is not mandatory to avail the loan against the insurance policy since the policy serves as collateral for LIC.
  • The LIC policy loan interest rate is considerably lower compared to Personal Loans.


To avail a loan against LIC policy, certain conditions must be met:

  • The policy should have at least three premium payments made to be eligible for a loan.
  • The loan amount can be up to 90% of the policy’s surrender value or 85% of the paid-up policies.
  • Some policies acquire surrender value after a few years, and during this period, no loan can be extended if the policy is surrendered.
  • The policy itself serves as collateral for this type of loan.
  • Interest on the loan is typically paid on a half-yearly basis, and the minimum loan period is 6 months.
  • The lender may ask for loan repayment along with interest by providing a three-month notice.
  • In case of default, the lender can foreclose the policy and use the proceeds to settle the loan.
  • A grace period of 30 days is usually granted to borrowers for loan settlement; failure to repay within this period allows the lender, including LIC, to foreclose the policy.
  • In the unfortunate event of the borrower’s death, the insurer settles the claim with the nominee after deducting the outstanding loan amount.
  • The loan against LIC policy has a minimum tenure of 6 months.
  • Applicants must pay at least 6 EMIs before they are allowed to prepay the loan.
  • In the unfortunate event of the policyholder’s death, interest will be calculated up to the date of their demise.
  • If the policy matures, the maturity amount can be used to settle the remaining loan principal amount.
  • Only LIC policyholders with endowment plans can avail this loan facility.


To be eligible for availing a loan against LIC policy, the following key criteria must be met:

  1. The borrower must be 18 years of age or above.
  2. The loan is available only for Indian residents.
  3. The borrower should own an LIC policy that has a surrender or cash value.
  4. Premiums for a minimum of three years must have been paid against the policy, creating a surrender value.
  5. The loan amount cannot exceed 90% of the policy’s surrender value; for paid-up policies, the maximum loan value can be 85%.


Loans against LIC Policy offer several advantages to Indian consumers, including:

  • Policyholders can avail up to 80%-90% of their policy’s surrender value, making it an attractive option.
  • Compared to the typical 13-15% interest charged for personal loans, the interest rates for loans against LIC policies are lower. LIC offers interest rates around 10-12%.
  • The loan disbursal process is faster due to minimal paperwork, allowing individuals to receive the loan amount within just 3-5 days.
  • These loans are secured as the LIC policy serves as collateral, providing borrowers with added security and peace of mind.

LIC Personal Loan Interest Rate

The LIC Personal Loan interest rates are generally lower compared to regular personal loans. Currently, the LIC Personal Loan interest rate ranges from 9.00% to 36.00%, and it may vary depending on the lender. Borrowers can avail loans against their insurance policy from LIC or other lenders like SBI, HDFC Bank, Axis Bank, and others at rates that are 1-2% lower than standard personal loan rates.

Here we provide comparison of some personal loan interest rates for top level lenders:

LenderInterest rate
Life Insurance Corporation Of IndiaStarting from 9.00%
SBIStarting from 9.60%
HDFC BankStarting from 10.25%
ICICI BankStarting from 10.25%
Axis BankStarting from 10.49%


There are several disadvantages of taking a loan against LIC policy:

  • If you fail to repay the loan, the insurance company may terminate the policy, resulting in the loss of coverage benefits under the plan.
  • The loan amount is limited as it is offered against the surrender value of your policy. This might not be sufficient to cover your financial requirements adequately.
  • Once you avail a loan on your LIC policy, the same policy cannot be used as collateral to avail other loans, limiting your borrowing options.
  • If the loan is not repaid, the outstanding amount is deducted from the maturity and death benefit, significantly reducing the values. This can hinder wealth creation and affect the overall financial planning.

Check the LIC loan interest amount online

To check the LIC loan interest amount online, follow these step-by-step instructions:

  • Go to the LIC Cuatomer Portal.
  • In the right sidebar, click on the “Customer Portal” option.
  • Enter your user ID, password, date of birth, and click on the sign-in button to log in.
  • From the menu, select “Online Payments” and then choose the “Loan Interest Payment” option to proceed.
  • Select the loan insurance policy number for which you want to check the interest details.
  • The system will display the relevant information, including whether the user has a loan against their policy.
  • Double-check the information and proceed to the payment option.
  • The system will provide up-to-date interest rates for the loan.

Alternatively, the user can visit the LIC branch and request the interest details.

How to Take Loan on Lic Policy?

To apply for a Loan against LIC policy, you have the option of either the offline method or the online method:

Offline Method

Please make a visit to the nearby LIC office, where you will need to complete the loan application forms and submit the necessary KYC documents. Submit these documents along with the original policy document. Once the application details are verified, you can receive a loan amount of up to 90% of the policy’s surrender value.

Online Method

Upon registering for LIC e-Services, access your online account to verify the eligibility of your insurance policy for a loan against LIC policy. If eligible, the terms, conditions, interest rates, and other features of the loan will be displayed online. Submit the application online and, if required, upload KYC documents or send them to the nearby LIC Office for processing.

By following either of these methods, you can apply for a Loan against LIC policy conveniently.

Your Doubts : Best Answers

Normally, many Borrowers have some confusion about Loan Against Lic Policy in their mind. So, here we provide mostly asked questions with their best answers that help to you.

Does LIC India provides personal loans?

Yes, LIC India provides personal loans against LIC policies, which are available to individuals meeting certain criteria. Professionals between the ages of 23 and 60 years are eligible to apply for this type of loan.

How much loan amount can be availed against an insurance policy?

The loan amount available against an insurance policy is generally in the range of 70% to 90% of the policy’s surrender value.

What is Policy Bond?

A policy bond is a legal document that policyholders need to sign to avail the benefits of their insurance policy, including the option of a loan if applicable. It contains all the relevant terms and conditions of the insurance policy and serves as collateral with LIC in case a loan is opted for.

What is Surrender Value?

Surrender value refers to the amount received by a policyholder if they surrender their insurance plan before its maturity. This value serves as the basis for obtaining a loan against an LIC policy, as the loan amount depends on the current surrender value of the policy. LIC sets the loan amount as a certain percentage of the surrender value.

Which type of LIC policy can be used to avail a loan?

Only endowment or money-back policies with a guaranteed surrender value can be offered as collateral for a loan. Term policies or Unit Linked Insurance Policies (ULIPs) linked to stock markets may not be accepted as security for loans.

How is a loan against LIC policy different from other kind of loans?

A loan against LIC policy offers several advantages, including lower interest rates, semi-annual interest payments, quick disbursement due to the policy acting as collateral, loan amount based on the surrender value, and accessibility to applicants with a poor credit score.

Where can one obtain a loan against a LIC policy?

Loans against LIC policies can be availed from Life Insurance Corporation of India (LIC) or LIC Housing Finance. Additionally, many banks, such as Kotak Mahindra Bank, Axis Bank, State Bank of India, and HDFC Bank, offer loans against LIC policies or policies issued by other private insurers.

Can I get a loan against an LIC policy from any bank?

No, only a few banks in India, including Life Insurance Corporation of India and its subsidiary LIC Housing Finance, offer loans against LIC policies. Some leading banks and NBFCs providing this secured personal loan option include HDFC Bank, Axis Bank, Bajaj Finserv, and Kotak Mahindra Bank.

What Documents are necessary to get Loans against LIC Policy?

To avail a Loan against LIC Policy, you will need the following documents:

  • Original insurance policy bond.
  • Loan application form.
  • Assignment deed to allot the loan to LIC.
  • Identity proof of the individual.
  • Address proof of the individual.
  • Income proof of the individual.

What is the interest rate charged on a loan against an insurance policy?

LIC typically charges an interest rate ranging from 9% to 10%, depending on the insurance plan. Banks, on the other hand, usually charge interest rates between 10% and 15% for loans against insurance policies. It’s worth noting that some banks may offer such loans or overdrafts only to their account holders.

What happens if the policyholder dies while having taken a loan against LIC policy?

If the policyholder passes away during the loan tenure, LIC deducts the outstanding loan principal amount and interest from the claim settlement amount. The remaining amount is then paid to the beneficiaries of the policy.

Can loan against LIC policy be available on all kind of insurance policies?

No, loans against LIC policies are not available for all types of insurance policies. Only endowment plans on which insurance premiums have been paid for at least three years are eligible for loans against LIC policies.

What happens if the borrower is unable to repay the loan?

If the applicant is unable to repay the loan, the LIC policy held by the applicant is used as collateral. In such a situation, LIC reserves the right to withhold the policy.

Finally, i hope “Loan Against Lic Policy 2023: How to Take Loan on Lic Policy” shared information provides you all kind of help.

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