Types of LIC policies eligible for loans
LIC offers many different types of policies designed to meet specific needs, be it life cover, savings, retirement, or child education. These include:
- Term insurance plans
- Whole life policies
- Endowment plans
- Money-back policies
- Pension schemes
- ULIPs (Unit Linked Insurance Plans)
However, not all LIC policies qualify for loans. Typically, only traditional endowment policies and ULIPs are eligible. Term plans, which offer pure life cover with no investment value, are excluded since they do not build a surrender value. So, if you hold a ULIP or an endowment plan, you can use it to borrow money without affecting your policy benefits.
Holding an eligible LIC policy? Borrow up to 90% of its surrender value, quickly and securely. Apply in minutes
Eligibility criteria for taking loan on LIC policy
If you are planning to borrow against your LIC policy, make sure you meet the following conditions:
- You must be 18 years or older at the time of loan application.
- Your LIC policy should be active and not lapsed.
- The policy must be either a ULIP or endowment plan.
- The loan amount can go up to 90% of the policy’s surrender value.
The surrender value increases as you continue paying premiums over time. The longer you hold your policy, the higher the surrender value and hence, the higher your loan eligibility.
Policy active and premiums paid? You are likely eligible for a quick loan against it. Click to know more
Documents required for loan against LIC policy
Getting a lo an against your LIC policy is simple and requires minimal documentation. Here’s what you’ll need:
Document type
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Details
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Application form
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Duly filled loan application form
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Original policy document
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Your LIC ULIP or endowment policy
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Identity proof
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PAN Card, Aadhaar Card, Voter ID, etc.
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Address proof
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Utility bill, Passport, Aadhaar, etc.
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Bank account proof
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Passbook or bank statement
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These documents are needed for verification and loan disbursement. Make sure your policy is in force and your KYC is up to date.
Step-by-step process to apply for a loan
Applying for a loan against your LIC policy doesn’t involve complicated procedures. Here is how to do it:
- Visit your nearest LIC branch or go to the LIC website.
- Fill out the application form with the necessary details.
- Submit your original policy document along with required ID and address proof.
- LIC will assess your loan eligibility based on the policy’s surrender value.
- Once approved, the loan amount is directly transferred to your bank account.
The process is fast, transparent, and does not require pledging any new assets. Your policy continues as usual, provided you keep paying the interest regularly.
Funds needed fast? Get a loan against your policy with minimal paperwork and zero hassle. Apply today
Interest rates and repayment options
One of the biggest advantages of a loan against LIC policies is the lower interest rate, usually between 6% and 24% per annum. This is significantly lower than the rates on personal loans.
Repayment is also flexible. You can:
- Pay interest regularly and repay the principal later
- Or repay both principal and interest as a lump sum
If the interest is not paid regularly, it’s deducted from the policy’s benefits. In extreme cases, it can even result in the policy lapsing, so staying on track with interest payments is important.
Enjoy lower interest rates and easy repayments, without affecting your long-term goals. Explore options
Advantages and risks of taking a loan against LIC policy
Like any financial move, borrowing against your insurance policy has both benefits and risks. Here is a quick look:
Advantages
- Lower interest than unsecured loans.
- No fresh collateral needed your LIC policy is enough.
- Quick approvals and simple documentation.
- No need to redeem your existing investments.
Risks
- Unpaid interest can reduce the policy’s maturity value.
- If not repaid, the loan could cause the policy to lapse.
- Loan value is limited to the surrender value of your policy.
Still, for most policyholders with active ULIP or endowment plans, it’s a smart and efficient way to unlock funds when needed.
Conclusion
LIC policies are much more than long-term protection tools. If you have an endowment plan or ULIP, you are not just securing your future you are also creating an option for instant liquidity. Whether it is for emergency medical needs, education, business growth, or urgent bills, a loan against your policy gives you access to funds without disrupting your savings. With quick processing, low interest, and no collateral demands, it’s one of the most stress-free loan options available today.
Let your policy work for you today. Use it to borrow what you need when you need it. Apply for a loan against your insurance policy now
