LIC Policy Loan Assistance in Kharadi
Need funds for a short period and hold a traditional LIC policy? A loan against the policy can sometimes be a simpler option than surrendering it or taking a personal loan. I help policyholders in Kharadi check eligibility and understand the interest and repayment terms before applying to LIC.
A policy loan in brief
- Available on eligible policies with surrender value
- Amount is a percentage of the surrender value
- Interest is charged at the rate LIC sets
- The policy continues while the loan is outstanding
How Loans Against LIC Policies Work
Many traditional LIC plans – such as endowment and some money back and whole life plans – allow you to borrow from LIC using the policy as security, once the policy has acquired a surrender value. Term plans, which have no surrender value, generally don't offer loans. Whether your policy qualifies is stated in its conditions.
How much you can borrow
The maximum loan is a percentage of the policy's surrender value, as per its terms – the percentage can differ depending on whether the policy is in force or paid-up. So a policy that's only a few years old usually supports a smaller loan than one that's been running for a long time.
Interest and repayment
LIC charges interest at the rate applicable when the loan is granted, typically payable at set intervals. You can usually repay the loan in part or full during the policy's life. If any loan and interest remain outstanding when the policy matures or a claim arises, they are deducted from the amount payable.
Keep an eye on unpaid interest. If the outstanding loan and interest grow beyond the limit allowed against the surrender value, LIC may take action as per policy terms, which can end the policy. I'll help you understand your numbers before and after taking the loan.
How to apply
Loan requests are made to LIC – through its official online services for eligible policies, or through the servicing branch with the required forms, KYC documents and bank details. I'll explain the current process, help you fill in the forms correctly and tell you where to submit them. Approval and disbursement are by LIC.
Loan vs surrender: Surrendering a policy ends it, and surrender values are often lower than people expect. A policy loan keeps the cover going. It's worth comparing both before deciding – we can go through the figures together.
Policy Loan vs Surrender
A general comparison. Actual figures depend on your policy and LIC's terms.
| Point | Policy loan | Surrender |
|---|---|---|
| Life cover | Continues | Ends |
| Cost | Interest on the loan | Loss of future benefits |
| Amount available | Percentage of surrender value | Surrender value |
| At maturity / claim | Outstanding loan and interest deducted | Not applicable |
Please note: LIC plan benefits, premiums, eligibility and applicable terms depend on the specific plan and prevailing LIC rules. Information here is for general guidance; please verify the latest details and policy terms before making a decision. Policy issuance and claim settlement are subject to LIC's rules and approval.
Official LIC website →LIC Policy Loan – FAQs
Common questions about borrowing against an LIC policy.
Generally no. Term plans don't build surrender value, so they don't support loans. Loans are usually available on eligible traditional savings-type policies.
A percentage of the policy's surrender value, as per its terms. The exact eligible amount is calculated by LIC for your policy.
You can repay it during the policy's life. Any loan and interest still outstanding is deducted from the maturity or claim amount. Unpaid interest should be watched, as it adds to the outstanding amount.
For eligible policies, LIC has offered loan requests through its official online services. Otherwise, you can apply at the servicing branch. I'll guide you on the current process.
Thinking of a Loan on Your Policy?
Let's check eligibility and the interest cost before you apply.