A Guide to Loan Against LIC Policy

A loan against LIC policy is a secured borrowing option where your life insurance policy is used as collateral. This page explains its features, benefits, eligibility, and how to apply.
APPLY NOW
Get Loan Against Insurance Policy!
APPLY NOW
3 mins read
16-July-2025

Life insurance is not just about protecting your family’s future. If you hold a ULIP or endowment policy, it can also help you meet urgent financial needs without breaking your long-term goals. With a loan against your insurance policy, you can borrow money by using your policy as security, all while continuing to enjoy the benefits it offers. Whether it is an emergency, a business need, or education costs tapping into the surrender value of your insurance policy can give you the liquidity you need, without hassle.

Need quick funds without breaking your investments? Get a loan against your ULIP or endowment plan with easy terms. Apply now

What is a loan against LIC policy?

In simple terms, this is a loan where you borrow against the value of your life insurance policy. But here is a key point, not all LIC policies qualify. We offer loans only against ULIP and endowment policies with a surrender value. This loan is secured, which means you can borrow at a lower interest rate. And since your policy stays active, you do not lose your life cover. You can borrow up to 80% of the surrender value and repay as per your convenience.

Loan against LIC policy explained

When you take a loan against your life insurance, you’re not giving up the policy you are just unlocking its value. The amount you can borrow is usually up to 80% of the surrender value. Interest is charged only on the amount borrowed, and you continue to enjoy your policy benefits as long as the terms are met.

Why let your insurance policy sit idle? Put your ULIP or endowment plan to work when you need it most. Apply online in minutes

Advantages of loan against LIC policy

A loan against your policy comes with several practical advantages:

  • Quick access to money – Funds are usually disbursed faster than personal loans.

  • No need to surrender the policy – Your life cover remains active.

  • Lower interest rates – As the loan is secured, interest is often lower.

  • Flexible repayment – You can repay as a lump sum or in parts.

Loan Against Shares
Loan Against Mutual Funds

Eligibility criteria for loan against LIC policy

To apply for a loan against your insurance policy, make sure these points are covered:

  • Policy type: Must be a ULIP or endowment plan.
  • Surrender value: The policy should have built up a surrender value.
  • Policy age: Typically, the policy should be at least 3 years old.
  • Premium status: All due premiums should be paid up to date.
  • Loan amount: Usually up to 80% of the surrender value.

Factors influencing loan against LIC policy

Several factors decide the loan amount and terms:

  • Surrender value – This is the biggest factor.
  • Loan-to-value ratio – Usually 80% of the surrender value.
  • Interest rate – May vary slightly depending on the lender.
  • Policy tenure – Longer-tenured policies may offer higher values.
  • Repayment options – Flexibility in repayment adds to convenience.

Risks associated with loan against LIC policy

As with any loan, there are a few things to watch out for:

  • Interest keeps adding up – If not repaid on time, interest can grow.

  • Loan cap – You cannot not borrow beyond your policy’s surrender value.

  • Policy benefits impact – If you do not repay, it may affect your death benefit payout.

How to avail a loan against LIC policy?

You can choose between two methods, both simple.

Online process

  1. Visit the LIC website and log in.

  2. Go to the ‘Policy Loan’ section.

  3. Choose the eligible policy (ULIP or endowment).

  4. View your eligible loan amount.

  5. Fill and submit the online form.

  6. On approval, funds are transferred to your bank.

Offline process

  1. Visit your nearest LIC branch.

  2. Fill in the loan application form.

  3. Submit your policy, ID proof, and other required documents.

  4. LIC will verify and process the application.

  5. On approval, funds are credited to your account.

Applying for LAIP through Bajaj Finserv? You can get fast, paperless approval on ULIP and endowment policy loans. Start now

What documents are required to avail loans against LIC policy?

Here is what you will need:

  • Filled loan application form

  • Original ULIP or endowment policy

  • Valid ID proof (Aadhaar, PAN, Passport)

  • Address proof

  • Cancelled cheque

  • Latest premium payment receipts

Comparison with other loan options

Understand how a loan against your insurance policy stacks up against other common loan options.

Loan against LIC policy vs Personal loan

See how policy loans differ from personal loans in terms of rates, eligibility, and flexibility.

Feature

LIC policy loan

Personal loan

Collateral

Yes – ULIP/endowment

No

Interest rate

Lower

Higher

Credit score needed

Not mandatory

Required

Loan amount basis

Based on surrender value

Based on income

Repayment flexibility

High

Moderate


LIC policy loan vs loan against securities

Compare insurance-based loans with those against shares or mutual funds to make an informed choice.

Feature

LIC policy loan

Loan against securities

Collateral

ULIP or endowment policy

Shares, mutual funds

Interest rate

Lower

Can be variable

Loan amount

Up to 80% of value

Up to 50%

Market risk

None

Yes

Credit score needed

Not required

Not required


How to repay loans against LIC policy?

Explore easy repayment options, from instalments to lump sum or claim-based settlement.

  • EMIs – Pay back the loan in instalments.

  • Lump sum – Repay the entire amount any time before policy maturity.

  • Claim adjustment – If unpaid, the balance is deducted from the final maturity or death benefit.

Final thoughts

A loan against your ULIP or endowment policy is a smart way to unlock quick funds without disturbing your life cover. It’s cheaper than personal loans, and far more flexible. Just remember repaying on time protects your policy benefits. If you're looking for low-cost funds with minimal hassle, this is an option worth considering.

Have a ULIP or endowment plan? Do not let it sit idle. Get a loan of up to 80% of its surrender value today. Apply now

Bajaj Finserv app for all your financial needs and goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-qualified limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators
  • Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

Do more with the Bajaj Finserv App!

UPI, Wallet, Loans, Investments, Cards, Shopping and more

GET THE APP

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.

Frequently asked questions

Can I get a loan against my LIC policy?
Yes, you can get a loan against your LIC policy. The loan amount is typically a percentage of the policy's surrender value, allowing you to access funds without liquidating your policy.
Is taking a loan from LIC good?
Taking a loan from LIC can be beneficial due to lower interest rates compared to unsecured loans. Additionally, the loan process is straightforward, and you continue to receive life cover benefits while the loan is active.
Can I take a loan from a paid up LIC policy?
Yes, you can take a loan from a paid-up LIC policy. A paid-up policy with sufficient surrender value can be used as collateral for the loan, providing you with access to funds based on that value.
Can we take a loan against a life insurance policy?

Yes, you can avail a loan against a life insurance policy by using its surrender value as collateral. This allows you to access funds without surrendering your policy, ensuring you retain its benefits and coverage. The process is quick, with minimal documentation and competitive interest rates.

Avail hassle-free loans against your insurance policy! Apply now

Can we take a loan against a LIC policy?

Yes, you can take a loan against eligible LIC policies, provided they have acquired a surrender value. The loan is secured against the policy's value and can be a convenient way to access funds without liquidating your investment.

How much loan can I get from my LIC policy?

You can get up to 80% of the surrender value of your LIC policy (85% for paid-up policies). The exact amount depends on your policy type, premiums paid, and duration. Check your policy brochure or contact LIC for accurate loan eligibility.

What is the interest rate for LIC policy loan?

The interest rate on LIC policy loans typically ranges between 9% and 10%. This rate is charged on the loan amount and is usually compounded semi-annually. It’s lower than many unsecured loans as the policy itself acts as collateral.

Is it good to take loan against insurance policy?

Yes, taking a loan against your life insurance policy is a smart option for urgent financial needs. It offers lower interest rates, no credit checks, and doesn’t disrupt the policy benefits, allowing you to access funds without selling assets.

Can I close my LIC and get money-back?

Yes, you can surrender your LIC policy to receive the surrender value, provided premiums have been paid for at least three years. However, you may lose out on full benefits or bonuses if surrendered early. Evaluate alternatives like a loan before closing.

How much money will I get after 3 years of LIC policy?

After paying premiums for three years, your LIC policy gains surrender value. The amount depends on the type of policy, premiums paid, and bonuses accrued. You can check your surrender value in your policy conditions or contact LIC.

Does LIC loan reflect in CIBIL?

No, loans taken directly from LIC against policies typically do not reflect in your CIBIL score, as they are not reported to credit bureaus. However, if the loan is from a bank against a LIC policy, it may impact your credit report.

Show More Show Less