In the Corona era, people are looking at different options to raise funds. In such a situation, you can get a lot of relief knowing that you can get a loan against your policy in Life Insurance Corporation of India (LIC). Not only this, this loan is easily available and at a low interest rate.
Life Insurance Corporation of India (LIC) gives personal loan against its insurance plans. This loan can be taken for expenses like travel, higher education, medical emergency, wedding, home repairs etc. It is a secured loan against policy where your insurance policy is kept as security. If the applicant is unable to repay the loan, LIC can reimburse the same from the maturity of the insurance policy or the claim amount.
You can find out how much loan you are eligible for through LIC’s e-services. It is a secured loan as your policy documents are kept as collateral in this. If the borrower fails to repay the loan, LIC deducts the money from his maturity or claim amount.
The minimum tenure of the loan is 6 months, but it can be repaid till the entire maturity period. Not only this, LIC also gives the facility that you just keep paying the interest and get the principal amount deducted from the maturity amount later. It is available only on endowment plans, income plans and unit linked plans that have a surrender value. It is not available on term plans. For example, this loan is available on LIC’s New Jeevan Anand, Jeevan Rakshak, Jeevan Lakshya, Jeevan Pragati, Jeevan Labh etc. plans.
Loan interest rate on LIC policy:
The interest rate on taking loan from Life Insurance Corporation of India (LIC) is less. At present, LIC is charging an interest of 10.5 percent for this, which is cheaper than the personal loans of other banks and institutions available in the market.
How Much Loan Available :
LIC only gives loan up to 90% of the surrender value of the policy. In case of some paid-up plans, this limit is only up to 85% of the policy surrender value. In both the cases, this surrender value is used as security.
What Documents Required :
Aadhar Card as ID, Voter ID Card, Aadhar Card as Passport and Residential Proof, Voter ID Card, Driving License, Utility Bill, Salary Slip as Income Proof, Bank statement may be required. A canceled check also has to be given in the account in which the loan is to be availed. Apart from this, the policy document has to be handed over to LIC on taking a loan.
What are the main terms of the loan:
Some important eligibility conditions are also kept for taking loan against LIC policy. The minimum age of the applicant should be 18 years. Applicant should have a valid LIC policy. The LIC policy used for availing the loan must have guaranteed surrender value i.e. this facility is not available on term policies. LIC premium must be paid in full for at least 3 years.
The minimum tenure for LIC Personal Loan is 6 months. The loan interest amount will have to be paid twice in a year, ie every six months. If the insurance policy matures before the loan is over, LIC will deduct the remaining loan amount from it. In case of death of the policy holder, interest has to be paid till the date of death.
How to Apply for Loan Against LIC Policy:
You can apply for Loan Against LIC Policy through online or offline mode. You visit the LIC office and fill the loan application form along with applicable KYC documents and submit along with the original policy document. If you have registered for LIC e-services, you can login to your online account and apply from the same portal. On submission of the application you may need to upload the KYC documents or send them to the nearest LIC office to make your loan application.
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