LIC Policy Loan: If you have ever taken a personal loan from a bank, then you will know that taking a loan means processing fees, hidden charges and then the tension of EMI every month. But imagine if you get a loan in which there is neither processing fee, nor any hidden charge and nor the hassle of EMI every month! Yes, such a loan really exists and the special thing is that many people are not even aware of it yet. We are talking about the loan available on LIC policy.

Loan on LIC policy

This loan is absolutely unique, because in this you can take a loan by mortgaging your own LIC policy. This is called a secured loan, in which your insurance plan itself is the guarantee. Just like banks give loans on FD, LIC also provides this facility to its policyholders. Its special thing is that it requires very little documentation and in most cases the loan amount is received in 3 to 5 days.

The best thing is that you do not have to surrender your policy to avail this loan. This means that the benefits of insurance remain and your financial needs are also fulfilled. Apart from this, there is no processing fee or any hidden charge.

LIC loan repayment

Now if we talk about repaying the loan, this method is also very easy. There is no need to pay EMI every month. You can repay the money as you are able. Yes, one thing to keep in mind is that interest keeps getting added to it annually. Even if you repay the loan within 6 months, you still have to pay interest for at least 6 months.

Loan repayment is also very flexible. If you want, you can pay the entire interest and principal in one go, or you can settle the principal later by paying only the interest on time. The third method is that the principal is deducted from the claim amount on maturity of the insurance and you keep paying only the interest from time to time.

Loan amount and interest rate information

The amount of this loan depends on the surrender value of your policy, which can usually be 80 to 90 percent. That is, you can withdraw a large part of your policy’s value as a loan. The interest rate is usually between 10 to 12 percent, but this also depends on the policy and profile.

If for any reason you are unable to repay the loan, then LIC reserves the right to terminate your policy. Or if the policy matures, the company can deduct the loan amount from your claim amount.

How to apply for a loan?

Now the question is how to apply for this loan? So its method is very simple. If you want, you can go to the offline LIC branch and apply with the documents, or you can apply online by going to LIC’s e-services portal. You just have to register first and then log in to your account and check whether your policy is eligible for this facility or not.

So next time if you need money in an emergency and want to avoid the long process of the bank, then this loan against LIC policy can be a great option. No hassle, no headache of filling forms and no burden of monthly installments – just direct money and easy repayment.