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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.

    What is The Rate of Interest Applicable for Availing a 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

    • Bank Bazaar Personal Loan
      "Best service"
      0.5 4.0/5 "Great!"
      I came to know about bank bazaar service through on line,like i was checking for my credit report and i have applied through it, and i am happy with their service, i have been using this bank bazaar service beyond one year, and i have been using mobile application it is user friendly application.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 16, 2019
    • Tata capital Personal Loan
      "Average service"
      0.5 3.5/5 "Pretty good"
      I have applied for Tata capital for an personal loan .Their was clear misunderstanding between the bank, like i have applied for 2,50,000 as an personal loan and they thought i am asking for an top up so they have given me just 1,50,000 ,and 1,00,000 they took as closure of that loan, and the rate of interest they have charged me 10.99% which was nominal,and even processing fee they have charged me was nominal, and the loan was on time.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 16, 2019
    • IDFC Bank Personal Loan
      "Best Service"
      0.5 5.0/5 "Blown Away!"
      I have taken a personal loan with IDFC bank from last 5 years, the loan amount was for Rs 6 lacs with tenure period of 5 years. Customer service was good and they collected documents on time. The rate of interest was nominal when compared to other banks.
      Was this review helpful? 0
      , mumbai
      Reviewed on Feb 16, 2019
    • Citibank Personal Loan
      "Instead of top up they can provide new loan"
      0.5 4.0/5 "Great!"
      CITI bank personal loan have only top up facility. The interest rates were fair and the processing fee was 1% which is good. They have sanctioned the loan within few hours. I have not faced any issues in this loan. Total tenure period of the loan is 14 months.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 16, 2019
    • HDFC Bank Personal Loan
      "Reduce the interest rate"
      0.5 5.0/5 "Blown Away!"
      HDFC interest rates are more compared to other bank but we can able to get the loan in seconds by using their app. The service has been fantastic. They have offered me a rate of interest which is 11% but they have increased upto 17% which is showing in the app and they are providing the loan without any documents.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 16, 2019
    • RBL Bank Personal Loan
      "Friend in need"
      0.5 5.0/5 "Blown Away!"
      RBL personal loan services are fantastic. The loan is getting over in few months. They have sanctioned the loan immediately and they have given me loan amount of my credit limit. Total tenure period of the loan is 12 months. Interest rates are fine and processing fee was 2% which is too high. I never had any issue with them.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 16, 2019
    • HDFC Bank Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have taken a personal loan with HDFC bank and my experience was good, the loan amount was sufficient and the rate of interest was nominal when compared to other banks. Customer service was good and they responded on time. Tenure period for this loan is 5 years and i preclosed the loan in 3 years with nominal preclosure charges.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 15, 2019
    • review Personal Loan
      "Not satisfied with the service "
      0.5 1.0/5 "Really Bad"
      Based on my previous experience with Bajaj for consumer loan based on that i have taken personal loan where they given some high rate of interest than what they promised for. They have high charges for the processing and documentation . Overall am not happy with their financial service.
      Was this review helpful? 0
      , chennai
      Reviewed on Feb 15, 2019
    • ICICI Bank Personal Loan
      "Best financial Service"
      0.5 5.0/5 "Blown Away!"
      I have taken personal loan from Icici bank . Am satisfied with the rate of interest which they have provided . There is processing fees for the loan which is nominal one and its been refunded . I make the payments through Ecs every month . They gave the tenure period of 2 years . They did quick documentation and received the loan.
      Was this review helpful? 0
      , chennai
      Reviewed on Feb 15, 2019
    • HDFC Bank Personal Loan
      "Best financial Service "
      0.5 5.0/5 "Blown Away!"
      I Have taken personal loan from the Hdfc bank , they have given good rate of interest which is satisfactory . There is nominal charges for the processing for approval and documentation . Am satisfied with the customer service as they have explained the terms and condition for the loan .
      Was this review helpful? 0
      , chennai
      Reviewed on Feb 15, 2019
    • HDFC Bank Personal Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      It was a very good experience i had with this loan where the process in getting this loan was quite simple. The loan amount was sufficient and the interest rate with them has been nominal as well. There has not been any sort of additional charges which they had made so far. Overall it had been a very good experience.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Feb 15, 2019
    • ICICI Bank Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I had applied for ICICI personal loan and to get my application processed it took only 7 days .Loan amount was credited with in an hour. It was a super fast loan application process with zero documentation. The tenure period is 4 year and i am happy to have their services .
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Feb 15, 2019
    • Fullerton Personal Loan
      "Interest should come down"
      0.5 2.0/5 "Expected more"
      Fullerton gave me the 28% of interest rate duration for the amount of five years, the loan amount was around Rs. 2.11 lakhs, the process was easy, concern about the interest, they should reduce the percentage as per the market. But the customer satisfactory is not good.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Feb 15, 2019
    • ICICI Bank Personal Loan
      "Nice experience"
      0.5 5.0/5 "Blown Away!"
      I have taken a personal loan from ICICI Bank and the process to get the loan is good and smooth. The customer services and response is good and the documentation process is satisfactory too. The after loan services are good and the interest rate and charges is fine too.
      Was this review helpful? 0
      , new delhi
      Reviewed on Feb 15, 2019
    • HDFC Bank Personal Loan
      "Quick and Hassle free loan experience"
      0.5 5.0/5 "Blown Away!"
      Being a customer I got the attractive interest rate of 10.5% on my personal loan, I took the loan of Rs. 20 lakhs for the tenure period of Rs. 5 lakhs, I went to the bank I approached for the loan products on time they sanctioned within a day I got the money.
      Was this review helpful? 0
      , lucknow
      Reviewed on Feb 15, 2019
    • Axis Bank Personal Loan
      "Need improvement on statement"
      0.5 5.0/5 "Blown Away!"
      I think 4 to 5 months I have been using AXIS card,the procedure was very simple to avail the card, I received the card on time, the customer service is genuine and they are explaining keen about the billing, its a life time free card. But I have not received the bank statement only I used get the sms.
      Was this review helpful? 0
      , lucknow
      Reviewed on Feb 15, 2019
    • Axis Bank Personal Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      It has been an excellent experience i had with them in getting my personal loan through them and they are one the best banks in getting the personal loan. The process has been simple and the loan amount has been sufficient as well. There has not been any foreclosure charges of part payment charges which they had made as well.
      Was this review helpful? 0
      , chennai
      Reviewed on Feb 15, 2019
    • HDFC Bank Personal Loan
      "Very Good Service"
      0.5 4.0/5 "Great!"
      It was a very good experience i had with the services of them where the process in getting this loan was very quick and simple. The loan amount was sufficient and the interest rate with them has been nominal as well. There has been foreclosure charges with them, their customer support has been helpful at times.
      Was this review helpful? 0
      , chennai
      Reviewed on Feb 15, 2019
    • Bank Bazaar Personal Loan
      "Good Service"
      0.5 5.0/5 "Blown Away!"
      Bankbazaar has a quick process for personal loan and credit cards. Past 2 years, i have been using this website. Through online, i have come to know about the website. Totally its a paperless process. Support team has given me a proper guidance regarding the loan process.
      Was this review helpful? 0
      , chennai
      Reviewed on Feb 15, 2019
    • HDFC Bank Personal Loan
      "Good Loan service"
      0.5 5.0/5 "Blown Away!"
      There is no particular reason for choosing the HDFC but i have received a message stating that its a pre-approved loan. They have offered me a interest rate of 17% which I'm not satisfied with it. I paid the processing fee of Rs. 3000 and they have sanctioned the loan on time. Since i related with HDFC, i have not submitted any documents except ID proof.
      Was this review helpful? 0
      , chennai
      Reviewed on Feb 15, 2019
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