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    Loan Against LIC Policy

    Besides being one of the most sought out options, for life insurance for Indian citizens, Life Insurance Corporation policy allows you to get personal loans against it for meeting your immediate needs. A lot of people are not aware of this advantage because of the lack of publicity of this option from the LIC policy.

    It is easier to get a loans against your LIC policy as they come at cheaper interest rates. However, they are only good for Personal Loan needs as there are restrictions in terms of the amount that can be borrowed even as a member of the policy. Note that for submission of loans only the endowment policies are applicable.

    How much can be Borrowed on your LIC Policy?

    The Cash Value is the term that needs to be noted, which is also known as the Surrender Value of the policy as well. Prior to applying for the loan it is essential to know the exact cash value of your policy as, in the case that it is very less it is useless applying for the personal finance option unless it is a huge amount.

    The Surrender or Cash Value

    The cash or surrender value is basically the amount payable to the policyholder in the case he or she decides to discontinue the policy and encash the same from LIC. This amount is only payable after three full years premiums have been paid to their LIC policy. Also, in case it is a participating policy, the Bonus amount is automatically attached to the amount as per rules of LIC. The surrendering of an LIC is not a good idea considering that the value is always considerably low. However, it means that the loans that you can avail against this amount from LIC will also always be comparatively low.

    Eligibility Criteria for Availing the Loan against your LIC Policy

    Here are some of the main eligibility criteria’s, if you wish to avail a loan against LIC policy:

    • He or she must be an Indian citizen or residing in India.
    • He or she should own an LIC policy.
    • The applicant also must have paid three years of complete premiums before applying for the loan.
    • He or she should be at least 18 years of age.
    • The maximum loan amount available under the policy is 90% of the Surrender Value of the policy. In Case of paid up policies 85% of the surrender value and cash value of bonus is the maximum that can be loaned in.
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    What is The Rate of Interest Applicable for Availing a Loan against LIC Policy?

    Loan against LIC Policy

    The rate of the interest applicable on the loan is 9% and the minimum period loan is given if for 6 months.

    Features and Benefits of Loan on LIC Policy

    The following are the features, including the benefits of availing a loan against your LIC policy:

    • The loan against your LIC policy is an advance made against the cash value or surrender value of the policy.
    • The advance is always less than the case value.
    • Most of the insurers approve 90% of the cash value of the policy.
    • In case a loan is given, the policy is absolutely assigned and held by Life Insurance Corporation of India as security for repayment of the loan.
    • You have to pay the interest specified in the loan, which in the case of an LIC policy is generally 9%.
    • If the individual fails to pay the interest by the due date, the amount will be added to the principle and the interest will be calculated again.
    • If the total amount of debt is more than the surrender value, LIC takes the leverage of terminating the policy.
    • If the policy matures prior completion of loan repayment, LIC also has the rights to deduct the loan amount from the maturity amount.

    Alternatives of Personal Finance besides Loan against LIC Policy

    There are other options for availing personal finance, other than loan against your LIC policy:

    1. Independent personal loans from banks and financial institutions, with higher rate of interest but more features, lesser restrictions of loan amount and more benefits.
    2. Personal Loan against Credit Card, which are more viable as an option in terms of lower interest rates and the repayment can be made through the monthly credit card bill cycle through EMIs. Again lesser restrictions.
    3. Other Life insurance providers also offer loan against their life insurance products although it is suggested not to take a loan against a ULIP as it has some risk factors involved.

    Loans against LIC Policy FAQs

    What is the amount of loan one can avail against an LIC Policy?

    The amount of loan sanctioned can be only till a maximum of 90% of the policys surrender value. The surrender value is achieved after payment of 3 years of premium in full, so the loan can be availed only after that.

    What is the minimum time within which the loan can be repaid?

    The minimum time allowed for repayment is six months. Even if the principal is settled off within two or three months, the interest for the period of six months will have to be paid.

    What if the policy matures or is claimed within the loan repayment period?

    In case the policy matures or is claimed within the repayment period, interest will be charged only till the maturity or claim date, appropriate principal and interest will be deducted and the balance will be paid out to the policyholder or the nominee, as the case may be.

    Can multiple loans be taken against a single LIC Policy?

    Yes, even if the interest on the first loan hasnt been paid, a second loan can be allowed from LIC, provided the policy is of an increasing cover type that increases annually. No reason needs to be offered for this loan as well.

    What is the rate of interest and how frequently is it calculated?

    The current rate of interest (as of December 2015) is 10% per annum which is the lowest that one can get in the market as far as personal loans are concerned. The interest is calculated semi-annually, so twice in a year.

    What is repayment structure or EMI scheme?

    There is no particular EMI structure and the principal can be paid in as less or as more amounts as possible. Lessening principal will effectively lessen the interest amount that needs to be paid.

    Can this facility be availed online?

    No, as of yet, the facility can be availed only by physically visiting the branch where one has availed the policy and the loan from. Repayments also have to be done through physical visits.

    Loan Against LIC Policy Reviews

    • Citibank Personal Loan
      "Overall good"
      0.5 4.0/5 "Great!"
      I had no issues to get the personal loan with Citibank. The process was fine and I got the loan as needed. The customer support and response is fine as well as they contacted me on time. I am not sure on the rate of interest and processing charges.
      Was this review helpful? 2
      , new delhi
      Reviewed on Dec 07, 2018
    • Bank Bazaar Personal Loan
      "Its Excellent"
      0.5 4.5/5 "Excellent!"
      Due to Bank Bazaar, only I got early salary short term plan. I had gone through the service provider and they helped me out. The online application is also good, the customer service is amazing. They call me back to back, if I busy they call me again to service.
      Was this review helpful? 2
      , ahmedabad
      Reviewed on Dec 07, 2018
    • Early Salary Personal Loan
      "Qucik Process"
      0.5 4.0/5 "Great!"
      The response is good even the loan was disbursed on time. I am very satisfied with the Early salary and the interest rate is good and enough. I took 10K with Early Salary and they have charged around Rs. 600 and I will pay the loan within one month.
      Was this review helpful? 1
      , ahmedabad
      Reviewed on Dec 07, 2018
    • Axis Bank Personal Loan
      "Its Average"
      0.5 5.0/5 "Blown Away!"
      In Axis bank the interest rate is high comparatively but its very easy to approach. I have been kept follow up with Axis but they taken some time process the personal loan application. I think they are charging some fee for per closuring the loan.
      Was this review helpful? 3
      , salem
      Reviewed on Dec 07, 2018
    • Bank Bazaar Personal Loan
      "EXCELLENT"
      0.5 5.0/5 "Blown Away!"
      It is the first time experience with the Bank bazaar where i am using it through the website where it is user friendly portal to access. The customer service is responsive also they explain the details of the loan. It is a very good portal to use.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Dec 07, 2018
    • Bank Bazaar Personal Loan
      "Excellent service"
      0.5 5.0/5 "Blown Away!"
      Bank Bazaar.com gave me good support, all the services are good,they call and intimated about the application. Recently I started using the application, the experience is really good. I came to the site through the promotion mail its fine.
      Was this review helpful? 2
      , vijayawada
      Reviewed on Dec 07, 2018
    • ICICI Bank Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have been using with the personal loan from the ICICI BANK from past four years, there service is too good, they have charged me nominal rate of interest in this loan and even processing fee they have charged me was nominal ,the loan amount they have given me was sufficient.
      Was this review helpful? 2
      , hyderabad
      Reviewed on Dec 07, 2018
    • ICICI Bank Personal Loan
      "Charges should be reduced"
      0.5 5.0/5 "Blown Away!"
      The customer support is good, they gave good support, initially they told charges would be low, they finally they charged high for the amount of Rs.1.9 lakh, I think they taken Rs.2500 processing fee +7500 for some other charges. Finally I got Rs. 1.8 lakh in my hand.
      Was this review helpful? 1
      , vijayawada
      Reviewed on Dec 07, 2018
    • Bank Bazaar Personal Loan
      "Easy to approch"
      0.5 4.0/5 "Great!"
      First time I have used this site to take the personal loan through online, the customer support is good. I came know about Bank Bazaar application through online, the website is very simple and to see all the offers in the market. I have been using mobile app is very easy.
      Was this review helpful? 2
      , mumbai
      Reviewed on Dec 07, 2018
    • IndusInd Bank Personal Loan
      "Interest rate should be reduced"
      0.5 4.0/5 "Great!"
      The response is very good for the loan amount they have gave me 14%, the loan amount approval is good. The processing fee is there for the amount Rs. 5 lakhs, the process is easy. Everything is good expect the interest rate it would be great if they reduce.
      Was this review helpful? 3
      , mumbai
      Reviewed on Dec 07, 2018
    • Kotak Personal Loan
      "Not user friendly loan"
      0.5 3.0/5 "Satisfactory"
      Got my personal loan 2.5 years ago. I have received the loan amount of 4.5 lakhs and they have provided me a interest rate of 17% which is quite high. Processing fee also high. I have paid the EMI of Rs. 12000 and i have selected the tenure period of 5 years. There is no partial payment and pre-closure facility available.
      Was this review helpful? 2
      , bangalore
      Reviewed on Dec 07, 2018
    • ICICI Bank Personal Loan
      "Not recommendable bank"
      0.5 4.0/5 "Great!"
      Bought my personal loan 2.5 years back. I have received the loan amount of Rs. 1.50 lakhs. They have given me a interest rate of 15% for this reason i have done a balance transfer to some other bank. I have paid the EMI of Rs. 5000 for the tenure period of 3 years. I have received the loan on time and the documentation process is quite easy.
      Was this review helpful? 2
      , bangalore
      Reviewed on Dec 07, 2018
    • IndusInd Bank Personal Loan
      "Not recommendable bank"
      0.5 5.0/5 "Blown Away!"
      I have purchased the loan 1.5 year back. They have offered me a interest rate of 11.28% and I'm happy about the interest rate. I have applied the amount of Rs. 7.8 lakhs and i have received the same. I got the loan on time. I pay the loan amount of Rs. 170000 approximately and i have chosen the tenure period of 5 years. They should inform the partial payment facility to the customer.
      Was this review helpful? 1
      , bangalore
      Reviewed on Dec 07, 2018
    • Bank Bazaar Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      I have been using BANK BAZAAR services for a while . The customer services is very responsible and helpful compare to others . I can compare every financial product from one website . So far it has been very good experience with bank bazaar . .
      Was this review helpful? 1
      , bangalore
      Reviewed on Dec 07, 2018
    • Bank Bazaar Personal Loan
      "Timely saving website"
      0.5 4.0/5 "Great!"
      The comparison option is good about the many banking information its helped to chose the best thing at one point.I got so many calls rather going to the bank. Bank Bazaar helped me to get call from the bank its made the process very faster. But value added response is not quick. I suggest it should be faster and the frequent call should be avoided.
      Was this review helpful? 1
      , bangalore
      Reviewed on Dec 07, 2018
    • Early Salary Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      I took a Personal Loan from the EARLY SALARY , the loan amount was satisfactory and it was a very fast service when I needed money. Overall it is very useful when you require money for emergency purposes. The tenure period is 1 month . Customer service is good and prompt .
      Was this review helpful? 1
      , bangalore
      Reviewed on Dec 07, 2018
    • Tata capital Personal Loan
      "Process should be simple"
      0.5 4.0/5 "Great!"
      The experience was average, because they were multiple call for the same request. I uploaded the documents then again collected physical documents again they came for signature. Finally they taken 15 days to sanction the loan and I felt the interest is higher.
      Was this review helpful? 1
      , bangalore
      Reviewed on Dec 07, 2018
    • Bank Bazaar Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      BANK BAZAAR provides the best service for me because i never expected this much soon i will receive my loan this much soon , i did not face any issue at the time of documentation . Website and is very easy to use with bank bazaar. Overall it has been good experience with bank bazaar .
      Was this review helpful? 2
      , mumbai
      Reviewed on Dec 07, 2018
    • Early Salary Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      I took a Personal Loan from the EARLY SALARY , there are so much hidden charges they charge 3000 rs without my knowledge . The loan application process took few days . The loan amount was credited to my account with in no time. The interest rates are also nominal when compared to other banks in the market.
      Was this review helpful? 1
      , mumbai
      Reviewed on Dec 07, 2018
    • Bank Bazaar Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      Bank Bazaar makes it easier to compare and choose various financial products online. Customer service is good they are very prompt . Website is very easy to use of bank bazaar . So far it was good experience . Mobile application also good to use . My loan experience is good .
      Was this review helpful? 3
      , jodhpur
      Reviewed on Dec 07, 2018
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