Loan Against LIC Policy: Know Maximum Loan Amount You Can Get Against Your LIC Policy

The Life Insurance Corporation of India (LIC) has successfully earned the Guinness World Records title for the ‘Most Life Insurance Policies Sold in 24 hours’ after selling 5,88,107 policies across India on January 20, 2025. With an overall market share of 57.05% as of March 2025, LIC continues to be a market leader in the Indian Insurance market. For years, policyholders have been paying premiums towards their policies. However, their LIC policy can prove to be advantageous in times of financial crisis.

LIC policyholders can apply for a loan against their policy. This loan uses the policy as a collateral, against which loans are given. Explore the key features of these loans against LIC policy, their eligibility, and steps to apply. Loans against LIC policy are available for policyholders. Individuals who seek financial help in emergencies can consider taking personal loan through their LIC policy

Key Features of Loans Against LIC policy

Availing loans against LIC policy come with the following features:

• Interest rates: These loans can be taken at a cheaper rate compared to other forms of unsecured loans.

• Credit rating: Since the LIC policy is used as a collateral, credit checks for these loans are usually not required.

• Uninterrupted coverage: Despite the LIC policy working as a collateral for the loan, its coverage still continues to hold.

• Quick processing: Such loans are processed quickly and with ease.

• Repayment flexibility: These loans offer flexibility in repaying the loans back, such as partial repayment or full repayments.

Eligibility Criteria

The minimum period for getting these loans is 6 months. Additionally, some eligibility conditions that apply on these loans are:

• Surrender value: The LIC policy achieves a surrender value after completing three years of premium payments. This surrender value determines the amount that will be received by the policyholder in case of early cancellations. In order to apply for a loan against LIC policy, the respective policy must have attained a surrender value.

• Limited policies eligible: Only a few LIC policies are eligible for loans against them. For example, term insurance plans are not eligible as they do not have a surrender value.

• Up-to-date premiums: The policyholder must have cleared all due premiums till date.

• Policyholder eligible: Only the policyholder is eligible to apply for the loan.

Where to Get a Loan Against an LIC Policy?

Loan against LIC policy can be secured through:

• Directly through the LIC portal

• Majority of banks and financial institutions

Maximum Loan Amounts for a Loan Against an LIC Policy

For loans against LIC policy, one can get up to 70-90% of the policy’s surrender value, depending on the policy type.

• For active policies, the maximum loan amount is 90% of the surrender value.

• For paid-up policies, where premium payments have stopped but the policy is maintained, the maximum loan amount is typically up to 85% of the surrender value.

Documents Required for Loans Against LIC Policy

The following documents are essential when applying this loan:

• Original policy document

• Basic KYC documents (including Aadhar card, PAN card, etc)

• Bank account details for loan amount disbursal

• Proof of income

• Loan application form

How to Apply for a Loan Against an LIC Policy?

One can apply for a loan against LIC policy either online or offline. To apply for this loan online, follow these steps:

1. Check policy details: First, ensure that the concerned LIC policy is eligible for a loan. For example, LIC endowment plans like LIC Bima Jyoti, LIC Bima Ratna, etc. are eligible.

2. Check loan eligibility: Ensure the fulfillment of all eligibility requirements. Check the maximum loan amount applicable (on an average, 80% of the total surrender value).

3. Pick a lender: Choose from different lending platforms online that provide loans against LIC policy, compare interest rates and eligibility across each. LIC Portals are also accessible.

4. Fill loan application form: Go through their online loan application form and fill it suitably.

5. Upload required documents: All the required documents mentioned above must be submitted for quick approval.

6. Amount disbursal: Once the documents and application are approved, the loan is disbursed into the provided bank account.

Alternatively, loans against LIC policy can also be applied for through offline mode by visiting a nearby LIC branch office or a bank/financial institution.

Conclusion

In summary, applying for a loan against LIC policy is a quick and easy method of managing a financial crisis without giving up on the benefits of the policy itself. These loans offer easy approvals, quick disbursals, and the advantage of retaining benefits of the policy.

Hello, I am Richa Jain, a seasoned financial expert passionate about empowering individuals with sound financial advice and strategies.