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How to Get Loan Against LIC Policy Online?

A life insurance policy is a contract between the insurance company and an individual. The company promises to pay a fixed amount of money after 15+ years or upon the policy holder’s death (under different circumstances). The individual has to pay a premium or the whole amount in a year. It depends on the company. Also, at times when faced with financial crisis policyholders can ask for a loan against LIC policy for which, they are paying a certain amount as a premium at fixed intervals.

Why is taking a loan from LIC policy, better?

First of all, there is no processing fee involved for the loan, along with zero hidden charges. The process is quicker when it comes to taking these kinds of loans. As the documents required to sanction a loan is already given. The individual does not have to submit any additional documents. 

Moreover, the person does not have to surrender their insurance policy to avail of the loan. This additional point attracts a person more, keeping his savings steady and still opting for a loan. Furthermore, the loan charges a low-interest rate.

Types of policies that approves a loan

Term insurance policies do not have the provision to offer loans. Moreover, the Unit-linked insurance plan does not approve a loan as well.

However, traditional life insurance policies have the flexibility of providing a loan: These are 

  • Money-back plan
  • Endowment plan
  • Life insurance plan

Eligibility criteria and documents required for a loan against LIC Policy

To acquire a loan, one must abide by the list elaborated below

First and foremost, the person should have a LIC policy of their own. The person has to be a citizen of India. The age limit is 18 years old or more. The policy must have a loan facility. The policy must attain the cash surrender value. Then only the person will be sanctioned the loan against LIC policy.

Documentation required for the loan are:

The person has to write an application. Also, he has to submit identity, address and income proof. Furthermore, an assignment deed also needs to be submitted where the loan is allotted to the life insurance policy.

Modes to avail of the loan.

How to get loan against LIC policy? It is very simple. There are two modes by which one can avail of the same;

  • The first is through the offline method. The person has to visit a nearby LIC branch office. The office will provide a few forms to fill out. The policy will have its terms and condition mentioned clearly. Before submitting, one must go through all the conditions. It is also essential to check whether the policy has the flexibility to provide a loan. Also, the documents required have to be submitted along with the application form. Once it is processed, the policyholder can get the loan approved within 3-5 days.
  • The second is an online method. The individual has to visit the authentic website of the company. Then go for the option that says online loan. Also, one can go to the customer portal and request an online loan. It is essential to make an Account: the email-id, date of birth, and password should be provided. Once the account is set, the person must select the policy against which they want to get a loan. Once the whole thing is processed, the individual will receive the amount in 3-5 days. 

How to repay the loan?

The repayment policy for LIC is straightforward. Moreover, one does not have to pay the loan through EMIs. Check out the points listed below for further details.

  • The principal amount and the interest can be repaid together.
  • One can also repay the interest amount yearly. 
  • At the time of maturity, submit the principal amount. Then repay the interest amount slowly and steadily.

Suppose the approved due date ends before repaying the entire amount. The company holds the right to deduct the amount from the maturity benefit that was scheduled at the start.

Benefits of taking a loan from a LIC policy

Taking a loan from a LIC policy has the following benefits:

  • The first is security. The loans taken from LIC are more secure than any other company.
  • The amount approved against the LIC policy is substantial for one’s emergency. Moreover, the policyholder can avail 80 to 90 per cent of the cash surrender value.
  • The interest rate for LIC policy loans is much lesser than the ones charged in a personal loan. The rate of interest decreases with the increase in the premium amount paid. They offer a 10-12 per cent interest rate.
  • Once the person has availed of the loan. He will get it within five days. The waiting time is less in comparison to other loan service providers. 

Overall, taking a loan from a life insurance policy is straightforward, hassle-free and quick we must say. Also, the policy being used here as collateral the borrower no longer need to pledge something materialistic like gold or property which they cannot afford to lose at any cost.

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Sakshi is a Financial Advisor who helps people with investments and help them to get more out of their investment.

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