Secured loan against LIC policy
You can take a loan against LIC insurance policies, if you have any. Loan against LIC policy is a secured loan with low interest rates. Usually, the rate of interest will be 10% payable on a half yearly basis. The amount of loan you are eligible for depends on the surrender value of your policy. So, you may get fewer amounts if you apply for a loan in the initial years of your policy.
Your credit history doesn’t matter to get a loan against your LIC insurance policy. So, even if you have a bad credit history or a low credit score, you can still get the loan.
Process to apply for a loan against LIC policy:
You need to complete a loan request form to apply for a loan against your LIC policy. You can get this document either from LIC website or you can call the customer care to get the document.
Once you get the document, you need to fill it up and take your agent’s signature on it. Then,submit the duly filled form along with your original LIC policy bond document at your LIC policy branch office to process the loan .
Applying for a loan against your insurance policy will hardly take 20-30 minutes if there is no crowd in the office. Otherwise, it may take some time.
Once you apply for the loan, your loan amount will be credited to your bank account on the 3rd working day from the date of application.
Things to consider before applying for a loan against LIC policy:
- You are eligible to get a loan against your LIC policy only after completion of 3 years, from the start date of your policy.
- Maximum amount you can borrow against your LIC policy is 50-60% of the premium(s) amount you already paid.
- Interest will be charged at the rate of 10% per annum (approximately) for the loan against your LIC policy.
- You have to pay the interest amount for every 6 months
- You need to surrender your original LIC policy bond
- There is no strict rule to pay the principal amount. As long as you pay the interest amount on time, you don’t need to pay the principal amount till you claim the policy value.
- In case of claiming the policy amount/end of maturity period, there is no need to worry. Life Insurance Corporation will deduct your loan amount and give the rest of the amount to you or your family.