How to Apply for LIC Loan Against LIC Policy Check LIC Loan Interest Full Guides 2023

How to Apply for LIC Loan Against LIC Policy Check LIC Loan Interest Full Guides 2023

How to Apply for LIC Loan Against LIC Policy: Life Insurance Corporation of India (LIC) offers secured personal loans, commonly known as loans against LIC policies, in addition to their insurance plans. By using your LIC policy as collateral, you can obtain this type of loan. Since it is a secured loan, you can access it at relatively low interest rates to meet your urgent financial needs.

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LIC, being India’s largest insurance company, provides policyholders the option to leverage their insurance policies as collateral for personal loans. The interest rates on these secured personal loans against LIC policies start as low as 9% per annum and have a repayment tenure of up to five years. You can borrow up to 90% of the policy’s surrender value, which can be used for various purposes such as funding a wedding, paying for education expenses, and handling other personal financial requirements. Once you receive the loan approval letter, it is advisable to keep it safe so that you can use it for future loan applications against your policy.

It is essential to understand that availing a loan against your LIC policy is a responsible financial decision. Since it is a secured loan, you need to ensure timely repayment to avoid any adverse impact on your policy’s benefits. Moreover, borrowing against your policy’s surrender value will reduce the maturity amount or death benefit available to your beneficiaries. Therefore, it is crucial to consider your financial requirements and repayment capacity before availing of the loan.

How to Apply for LIC Loan Against LIC Policy 2023

The Life Insurance Corporation of India (LIC) offers various policies that allow policyholders to apply for loans against the sum assured. This unique feature helps customers of LIC meet their emergency liquidity needs. To obtain a loan from LIC, policyholders must meet specific requirements and follow a standard procedure established by the company, as outlined in the following sections.

If you are facing difficulty obtaining a loan from a private or public sector bank due to a low credit score or other reasons, you have the option of getting a personal loan by leveraging your LIC policy.

To apply for a LIC loan against LIC policy, you will need to provide proof of ownership or ownership interest in the policy. Additionally, you may be required to submit some information about the insurance company that issued the policy. The insurance company might also request additional documents or information to evaluate your application and determine your eligibility for a LIC loan.

After providing all the necessary documentation, the insurance company will assess your application and make a decision regarding your eligibility for a LIC loan. If your application is approved, it typically takes several days or weeks to process the loan and issue a formal approval letter.

It’s important to understand the terms and conditions of the loan, including the interest rate, repayment period, and any other associated fees. Timely repayment is essential to avoid any negative impact on your policy’s benefits and to maintain a good standing with the insurance company.

How to Apply for LIC Loan Against LIC Policy 2023 Overview

How to Apply for LIC Loan Against LIC Policy 2023 Overview
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About LIC Loan Against LIC policy

The Life Insurance Corporation of India (LIC), being India’s oldest and largest insurance company, has a substantial customer base. Along with offering various insurance plans, LIC provides loans against its insurance policies. These loans are also offered by banks and other non-banking financial corporations (NBFCs).

In a life insurance policy, the policyholder pays regular premiums to the insurance company, and in return, the insurer provides a cash payout to the beneficiaries upon the insured’s death. The payout amount is typically based on the face value of the policy, and any additional amounts owed to the lender are determined by the terms of the policy contract.

A loan against a life insurance policy can be beneficial in situations where an individual requires financial support without making significant changes to their personal finances. For instance, someone who has recently lost a loved one may opt for a loan against their life insurance policy to cover funeral expenses or other unexpected costs, alleviating immediate financial burdens. This allows the policyholder to address urgent financial needs without disrupting their long-term financial plans or investments.

Conditions for taking Loan Against LIC Policy

To avail a loan against your Life Insurance Policy, you must fulfill specific conditions and meet certain requirements. Here are the key criteria:

  1. Policy Ownership: You must be the owner of the life insurance policy against which you are seeking the loan. Only policyholders can apply for this type of loan.
  2. Transfer of Ownership: You should have the right to transfer ownership or control of the policy to another party. This means you have the authority to use the policy as collateral for the loan.
  3. Financial Standing: You need to demonstrate that you are in good financial standing. This can be evidenced through documents like a recent bank statement or tax record, which show your financial stability.
  4. Repayment Capacity: The loan approval depends on your ability to repay the loan. Lenders will assess your income, expenses, and other financial commitments to determine if you can manage the loan repayment.

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

  1. Surrender Value Requirement: Some policies attain a surrender value after a few years of premiums being paid. If the policy is surrendered within this period, the insurer will not be obligated to pay anything.
  2. Minimum Premium Payments: The policy must have at least three premium payments made to be eligible for a loan.
  3. Loan Amount Limit: The loan amount can be up to 90% of the surrender value or 85% of paid-up policies. The loan cannot be extended until the required time has passed in such cases.
  4. Collateral: The policy itself serves as collateral for the loan.
  5. Interest Payment: Interest on the loan is typically paid on a half-yearly basis.
  6. Grace Period: A grace period of 30 days is provided to borrowers from the due date to settle the loan. If the borrower fails to repay within this period, the lender, including LIC, can foreclose the policy and use the proceeds to settle the loan.
  7. Loan Settlement on Borrower’s Death: In the unfortunate event of the borrower’s death, the insurer will settle the claim with the nominee after deducting the outstanding loan amount.

Loan Against LIC Policy Interest Rates

Bank/NBFC/HFCInterest Rate
Kotak Mahindra Bank10.75% onwards
LIC Housing Finance14.80% onwards
Axis Bank10.25% p.a. onwards
Bajaj Finserv13% onwards

How to Apply for LIC Loan against LIC policy?

A LIC loan against LIC policy is a financial product that allows the policyholder to borrow money against the value of their life insurance policy. This option is commonly used by individuals who wish to finance long-term financial objectives, such as debt consolidation or home purchase, but lack sufficient cash in their current budget to do so.

To apply for this type of loan, you need to fill out an application form and provide proof of your life insurance policy. The lender will assess your eligibility for the loan and determine the amount you can borrow. Depending on the value of your policy and your individual circumstances, you may be able to borrow up to the amount of your policy’s payout or even more.

A loan against a life insurance policy can be a useful tool for individuals seeking to secure enough financial resources to pursue their long-term goals without taking on additional debt. If you’re looking for ways to manage your finances and achieve your objectives, exploring the option of a loan against your insurance policy could be beneficial.

Currently, you have the option to apply for the same job either in person or online:

Offline Method:

To apply offline, you need to visit a nearby LIC office. There, you will need to fill out the loan application forms, submit any required KYC documents, and provide the original policy document. After completing these steps, you can send the documents to the LIC office.

Online Method:

For the online method, you can check if your insurance policy qualifies for a loan secured by the LIC policy by logging into your online account, provided you have registered for LIC e-Services. This allows you to apply for the loan online and avoid visiting the LIC office in person.

Documents Required

To apply for this secured loan, you need to submit the following essential personal loan documents:

  1. Original policy document
  2. Filled-in application form
  3. Passport-sized photographs
  4. Proof of identity: Passport, Aadhaar Card, Voter ID Card
  5. Proof of residence: Driving License, Utility Bills (water or electricity), Aadhaar Card, and Voter ID Card
  6. Additional documents such as bank account statements and salary slips may also be required by LIC.

Loan Repayment Schedule

A loan against an LIC policy is available for a minimum period of six months. The borrower needs to make a minimum of six monthly installments, even if the loan term is longer. Upon loan approval, the borrower receives a complete repayment schedule, which can be accessed through the LIC eServices portal. If the policy matures or the borrower passes away before the completion of the six-month period, the policy proceeds will be used to settle the loan, and interest will only be charged for the duration the loan was outstanding.

There are two procedures to repay the loan:

  1. Settlement at Maturity: You can settle the principal amount along with the claim amount at the maturity of the policy by paying interest in addition to the principal for a few years.
  2. Repay Principal Separately: Alternatively, you can repay the principal amount separately when you have extra cash available. This allows you to gradually reduce the loan balance and eventually clear the entire loan.


If you have a LIC policy, you have the option to take a loan against it. This can be useful if you are facing financial difficulties or unable to make payments on the policy. The process involves transferring the funds from your policy into a trust account and then applying for a loan against that account. The loan will be secured by the funds in the trust account and will have fixed interest and repayment terms.

However, it’s important to understand that this type of loan may not guarantee complete financial relief. It is essential to carefully consider your insurance needs and financial situation before applying for a loan against your LIC policy. Consulting with a lending institution or insurance broker can help you explore tailored options that suit your specific needs and circumstances. Be cautious and well-informed before making any financial decisions regarding your LIC policy.

FAQ’s About How to Apply for LIC Loan

Q: What is a LIC loan?

A: A LIC loan is a loan taken against a Life Insurance Corporation of India (LIC) policy, where the policy serves as collateral for the loan.

Q: Can I apply for a loan against my LIC policy?

A: Yes, as a policyholder of LIC, you can apply for a loan against your policy if it has acquired a surrender value and meets specific criteria.

Q: What are the prerequisites for applying for a LIC loan?

A: The policy must have acquired surrender value, and a minimum of three premium payments should have been made.

Q: How much loan can I get against my LIC policy?

A: You can get a loan for up to 90% of the policy’s surrender value or 85% of paid-up policies, depending on the policy’s terms.

Q: How is the loan amount determined?

A: The loan amount is based on the policy’s surrender value and other factors as per LIC’s guidelines.

Q: What documents are required for the loan application?

A: You will need the original policy document, filled-in application form, and relevant KYC documents like Aadhaar card, voter ID, passport, etc.

Q: Can I apply for a LIC loan online?

A: Yes, you can check if your insurance policy qualifies for a loan secured by the LIC policy through the LIC e-Services portal.

Q: What is the minimum duration of the LIC loan?

A: The minimum duration for a LIC loan is six months.

Q: How can I repay the loan?

A: You can repay the loan by settling the principal amount with the claim amount at maturity or by repaying the principal when you have extra cash.

Q: What happens if the policyholder dies before the loan is repaid?

A: In the unfortunate event of the borrower’s death, the outstanding loan amount will be deducted from the policy proceeds before settling the claim.

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