Loan Against LIC Policy

Features of Loan against LIC Policy

• Loan Amount: Up to 90% of the surrender value of the policy
• Interest Rates: Are insurance specific and are announced every year by LIC
• Minimum Tenure: 6 months from the date of its payment
• Maximum Tenure: As per the policy tenure
• Repayment: Interest repayment on half-yearly basis; principal amount can be repaid as per the policyholder’s financial position

Loan Alternatives to Loan Against LIC Policy

A life insurance policy offers financial security to your dependents in your absence. Availing a loan against it can jeopardize that financial security, especially if you default on loan repayment due to some unavoidable circumstances. Thus, before you apply avail a loan against your life insurance policy, explore other secured loan options first such as gold loans, loan against property, loan against mutual fund/ stocks/debentures, etc. Individuals having good credit profile should also consider applying for a personal loan.

Unlike loan against LIC policy, personal loans can be availed without pledging any collateral as security. Many banks and NBFCs also offer pre-approved instant personal loans to their select existing customers on the basis of their credit profiles. Such offers come with instant disbursals usually within a few hours and in some cases within a few seconds of making the loan application.

Here are the personal loan interest rates offered by a few banks and NBFCs:

*Applicable for selected customers

Loan Related Details of LIC Endowment Plans

LIC Bima Jyoti

Eligibility: To avail loan against LIC’s Bima Jyoti, policyholders should have paid premiums for at least two years.

Maximum loan amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: Up to (10-year G-Sec Rate* + 3%). Interest is compounded on half-yearly basis.

LIC Bima Ratna

Eligibility: For availing loan against LIC’s Bima Ratna, policyholders should have paid premiums for at least two years.

Maximum loan amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: Up to (10-year G-Sec Rate* + 3%) or the yield earned on the Corporation’s Non-Linked fund plus 1%, whichever is higher.

LIC’s Dhan Sanchay

Eligibility:

• Under Regular/Limited premium payment: The policyholder should have paid premiums for at least two years.
• Under Single Premium payment: The policy loan can be availed any time after three months from the date of issuance of policy or after the expiry of the Free-look Period, whichever is later.
• No Loan facility shall be available to the policyholder during the Payout Period

Maximum Loan Amount:

• Loan Amount under Regular/ Limited Premium Payment:
  • For in-force policies: Up to 90% of Surrender Value
  • For paid-up policies: Up to 80% of Surrender Value
• Loan Amount under Single Premium Payment: Up to 75% of Surrender Value

Interest Rate: Up to (10-year G-Sec Rate* + 3%) or the yield earned on the Corporation’s Non-Linked fund plus 1%, whichever is higher.

LIC Jeevan Azad

Eligibility: Policyholders should have paid premiums for at least two years to get a loan against LIC’s Jeevan Azad.

Maximum Loan Amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: Up to (10-year G-Sec Rate* + 3%) or the yield earned on the Corporation’s Non-Linked fund plus 1%, whichever is higher.

LIC New Endowment Plan

Eligibility: Policyholders of LIC’s New Endowment Plan should have paid premiums for at least two years to avail a loan against it.

Maximum Loan Amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

LIC New Jeevan Anand

Eligibility: To avail loan against LIC’s New Jeevan Anand insurance policy, the policyholders should have paid premiums for at least two years.

Maximum Loan Amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

LIC Single Premium Endowment Plan

Eligibility: To get a loan against LIC’s Single Premium Endowment Plan, policyholders should have completed at least one policy year.

Maximum Loan Amount: Up to 90% of the Surrender Value

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

LIC Jeevan Lakshay

Eligibility: Policyholders should have paid premiums for at least two years to get a loan against LIC’s Jeevan Lakshay.

Maximum Loan Amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

LIC Jeevan Labh

Eligibility: Policyholders of LIC’s Jeevan Labh should have paid premiums for at least two years to avail a loan against it.

Maximum Loan Amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

LIC Aadhaar Stambh

Eligibility: To be eligible for Loan against LIC’s Aadhaar Stambh, policyholders should have paid premiums for at least two years.

Maximum Loan Amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: Up to (10-year G-Sec Rate* + 3%) or the Yield earned on the Corporation’s Non-Linked fund + 1%, whichever is higher.

LIC Aadhaar Shila

Eligibility: To avail loan against LIC’s Aadhaar Shila insurance policy, the policyholders should have paid premiums for at least two years.

Maximum Loan Amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: Up to (10-year G-Sec Rate* + 3%) or the Yield earned on the Corporation’s Non-Linked fund + 1%, whichever is higher.

Loan Related Details of Whole Life Plans

LIC’s Jeevan Utsav

Eligibility: For availing loan against LIC’s Jeevan Utsav, policyholders should have paid premiums for at least two years.

Maximum Loan Amount:

• If the loan is availed before the beginning of the policy year in which the first Regular Income Benefits/ Flexi Income Benefit becomes due:
  • For in-force policies- Up to 75% of Surrender Value
  • For paid-up policies- Up to 50% of Surrender Value
• If the loan is availed from the beginning of the policy year in which the first Regular Income Benefits/ Flexi Income Benefit becomes due:
• Option I:

Loan amount is arrived in such a way that the effective annual interest component of the loan does not exceed 50% of the annual Regular Income Benefit, subject to a maximum of 75% of Surrender Value in case of in-force policies and 50% of Surrender Value in case of paid-up policies.

• Option II:

Loan amount is arrived in a such a way that the effective annual interest component of the loan does not surpass 50% of the annual Flexi Income Benefit, subject to a maximum of 75% of Surrender Value in case of in-force policies and 50% of Surrender Value in case of paid-up policies. Additionally, loan of up to 50% of Flexi Income Benefits due and not withdrawn is also permissible.

Interest Rate: Up to (10-year G-Sec Rate* + 3%) or the Yield earned on the Corporation’s Non-Linked fund + 1%, whichever is higher.

LIC Jeevan Umang

Eligibility: To avail loan against LIC’s Jeevan Umang, policyholders should have paid premiums for at least two years.

Maximum Loan Amount:

If loan is availed during the premium paying term:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

If loan is availed after the premium paying term:

The maximum loan amount is arrived in a such a way that the effective annual interest component of the loan does not exceed 50% of the annual survival benefit of the policy.

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

Loan Related Details of Money Back Schemes

LIC Dhan Rekha

Eligibility:

• Under Regular/Limited premium payment: The policyholders should have paid premiums for at least two years.
• Under Single Premium Payment: The policy loan can be availed any time after three months from the date of issuance of policy or after the expiry of the Free-look Period, whichever is later.

Maximum Loan Amount:

• Loan Amount under Regular/ Limited Premium Payment:
  • For in-force policies: Up to 90% of Surrender Value
  • For paid-up policies: Up to 80% of Surrender Value
• Loan Amount under Single Premium Payment: Up to 75% of Surrender Value

Interest Rate: Up to (10-year G-Sec Rate* + 3%) or the yield earned on the Corporation’s Non-Linked fund plus 1%, whichever is higher.

LIC New Bima Bachat

Eligibility: Policyholders of LIC New Bima Bachat should have completed at least one policy year.

Maximum Loan Amount: Up to 90% of the Surrender Value

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

LIC New Money Back Plan – 20 Years

Eligibility: To avail a loan against LIC’s New Money Back Plan – 20 Years, policyholders should have paid premiums for at least two years.

Maximum Loan Amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

LIC New Money Back Plan – 25 Years

Eligibility: Policyholders should have paid premiums for at least two years to get a loan against LIC’s New Money Back Plan – 25 Years.

Maximum Loan Amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

LIC Jeevan Umang

Eligibility: Policyholders of LIC Jeevan Umang should have paid premiums for at least two years to get a loan against it.

Maximum Loan Amount:

• If loan is availed during the premium paying term:
  • For in-force policies: Up to 90% of Surrender Value
  • For paid-up policies: Up to 80% of Surrender Value
• If loan is availed after the premium paying term:

The maximum loan amount is arrived in a such a way that the effective annual interest component of the loan does not exceed 50% of the annual survival benefit of the policy.

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

LIC New Children’s Money Back Plan

Eligibility: For availing loan against LIC’s New Children’s Money Back Plan, policyholders should have paid premiums for at least two years.

Maximum Loan Amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

LIC Jeevan Tarun

Eligibility: To get a loan against LIC’s Jeevan Tarun, policyholders should have paid premiums for at least two years.

Maximum Loan Amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

LIC Jeevan Shiromani

Eligibility: Policyholders of LIC Jeevan Shiromani should have paid premiums for at least two years to get a loan against it.

Maximum Loan Amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

LIC Bima Shree

Eligibility: Policyholders can avail loan against LIC’s Saral Pension after they have paid premiums for at least two years.

Maximum Loan Amount:

• For in-force policies: Up to 90% of Surrender Value
• For paid-up policies: Up to 80% of Surrender Value

Interest Rate: The interest rate applicable shall be based on the method approved by IRDAI.

Loan Related Details of Pension Plans

LIC Jeevan Dhara II

Eligibility: 

In case of Annuity Plans with return of premium options:

• Under Regular Premium Payment: The policyholder should have paid premiums for at least two years.

In case of Return of Purchase Price Plans:

• Under Single Premium Payment: The policy loan can be availed any time after three months from the date of issuance of policy or after the expiry of the Free-look Period, whichever is later.
• Under Joint Life Annuity: The loan amount is arrived in a such a way that the effective annual interest component of the loan does not surpass 50% of the annual annuity amount payable, subject to a maximum of 80% of Surrender Value (inclusive of Surrender value of Top-up annuity tranches, if any).

Interest Rate: Up to (10-year G-Sec Rate* + 3%) or the yield earned on the Corporation’s Non-Linked fund plus 1%, whichever is higher.

LIC Saral Pension

Eligibility: Policyholders can avail loan against LIC’s Saral Pension any time after completing six months from the date of commencement of the policy. Under the joint life annuity option, the loan can be availed by the annuitant; and on death of the annuitant, it can be availed by the spouse.

Maximum Loan Amount: The loan amount is arrived in a such a way that the effective annual interest component of the loan does not exceed 50% of the annual annuity amount payable.

Interest Rate: Up to (10-year G-Sec Rate* + 2%) or the yield earned on the Corporation’s Non-Linked fund plus 1%, whichever is higher.

LIC Jeevan Akshay – VII

Eligibility: Policyholders can avail loan against LIC’s Jeevan Akshay – VII under two options. The first option is Immediate annuity for life with the return of purchase price. The second option is the joint life immediate annuity for life with a provision for 100% of the annuity payable as long as one of the annuitant survives and the return of purchase price on death of last survivor.

Under the joint life annuity, the loan can be availed by the Primary Annuitant and in the absence of Primary Annuitant the same can be availed by the Secondary Annuitant.

Policyholders can avail loan against their policy any time after completing three months from the date of issuance of the policy or after the expiration of the free-look period, whichever is later.

Maximum Loan Amount: The maximum loan amount is arrived in a such a way that the effective annual interest component of the loan does not exceed 50% of the annual annuity amount payable, subject to a maximum of 80% of the surrender value.

Interest Rate: Up to (10-year G-Sec Rate* + 3%) or the yield earned on the Corporation’s Non-Linked fund plus 1%, whichever is higher.

LIC’s New Jeevan Shanti

Eligibility: Policyholders can avail loan against LIC’s New Jeevan Shanti any time after completing three months from the date of issuance of the policy or after the expiration of the free-look period, whichever is later. Under the joint life policy, the loan can be availed by the primary annuitant; and in the absence of the primary annuitant, the same can be availed by the secondary annuitant.

Maximum Loan Amount: The loan amount is arrived in a such a way that the effective annual interest component of the loan does not exceed 50% of the annual annuity amount payable, subject to the maximum of 80% of the surrender value.

Interest Rate: Up to (10-year G-Sec Rate* + 3%) or the yield earned on the Corporation’s Non-Linked fund plus 1%, whichever is higher.

How to Apply for LIC Loan against LIC Policy

Policyholders can make online application for loan against LIC policies through LIC’s customer portal – (https://ebiz.licindia.in/D2CPM/#Login). However, this portal is for premier service registered customers only. Hence, other LIC policyholders would have to visit the LIC branch offices.

Note that some banks also offer loan against insurance policy (including policies availed from LIC) as a part of their overall loan against securities product. Policyholders can compare the interest rates offered by LIC with those offered by such lenders and avail loan from the bank that offers them the best offer on their insurance policy.