Loan Eligibility Against LIC Policy: A Comprehensive Guide

Financial needs do not always announce their arrival. Whether it’s a medical emergency, a business gap, or personal expenses, you might need immediate funds without disturbing your long-term investments or savings. That’s where your LIC (Life Insurance Corporation) policy can come in handy. If you hold an LIC policy, you may already be eligible for a loan without applying for a high-interest unsecured loan or liquidating other assets. This guide will walk you through everything you need to know about loan eligibility against LIC policy, from features and eligibility to interest rates, application process, and what to avoid.

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Understanding loan eligibility for LIC policies

Not every LIC policy is eligible for a loan. Only traditional endowment plans and ULIPs are accepted because they offer a maturity or surrender value over time. Term insurance policies, which provide only risk cover without a savings component, cannot be pledged. If you have been paying premiums on a ULIP or endowment policy for a few years, chances are it has built a surrender value; this value can be used to take a loan.

Key features of loans against LIC policies

Here is what makes loans against LIC policies an attractive option:

• No income proof required: Loans are granted based on the policy value, not your salary or credit score.
• Quick approval and disbursal: Get funds within 24–48 hours* if documents are in place.
• Low interest rates: Interest is typically lower than unsecured loans since it’s a secured loan.
• Policy continues to earn bonuses: The policy remains active (if interest is regularly paid), and bonuses continue.
• Flexible tenure: Repayment periods can stretch up to 96 months, depending on the policy and provider.
• Loan value based on surrender value: You can borrow up to 80% of the surrender value of the policy.

A loan that lets your policy stay active and grow while giving you access to funds. No disruptions. No distress selling. Just smart borrowing. Apply now 

Eligibility criteria for availing loan against LIC policy

You do not need to meet complicated financial benchmarks to apply for a loan against your LIC policy. Here's what typically matters:

• You must be the policyholder: Only the person whose name the policy is under can apply.
• The policy must have acquired surrender value: Usually, this happens after 2–3 years of regular premium payments.
• Endowment or traditional plans are preferred: Must have an active Endowment and ULIP policy of either Bajaj Allianz Life Insurance Company Limited, ICICI Prudential Life Insurance Company Limited, TATA AIA Life Insurance Company Limited, Reliance Nippon Life Insurance Company Limited, Aviva Life Insurance Company India Limited, Edelweiss Life Insurance Co. Ltd.
• Policy should not be lapsed: The policy must be active, and premiums should be up to date.
• No fixed income requirement: Since the loan is asset-backed, no minimum salary or business income is required.

Documents required for loan application

Here is a list of commonly required documents when applying for a loan against your LIC policy:

Step-by-step process to apply for a loan against LIC policy

Here is how the loan process typically works:

Step 1: Confirm policy type

Ensure your LIC policy is a ULIP or endowment policy with surrender value.

Step 2: Choose your lending partner

Opt for trusted providers that offer fast LAS processing.

Step 3: Submit the application

Fill in basic details and upload required documents online.

Step 4: Policy assignment

The policy is assigned to the lender as collateral during the loan term.

Step 5: Loan approval and disbursal

Once verified, the sanctioned amount is credited to your bank account.

Here is how it typically works when borrowing against ULIP or endowment plans:

Note:

• If the policy has no lock-in, Simple interest is charged.
• If the policy is under lock-in, Compound interest applies.

Repayment can be made flexibly, with monthly installments, and principal at your convenience.

Comparison: Loan against LIC policy vs. other loan options

Here is how loan against LIC policy compares to other loan options such as unsecured loan:

Common mistakes to avoid when applying for a loan against LIC policy

While the process is simple, here are a few things to be mindful of:

• Not checking surrender value: Make sure your policy has built up enough value to qualify for a loan.
• Ignoring interest type: Know whether the lender charges simple or compound interest.
• Missing interest payments: Unpaid interest can be deducted from your policy maturity benefits.
• Using lapsed policies: A lapsed policy cannot be pledged for a loan.
• Borrowing more than needed: Only borrow what is required. Remember, the policy benefits are tied up until the loan is repaid.

Do not let simple oversights impact your long-term insurance returns. Know your terms, calculate your requirement, and borrow smartly. Use LAS for timely liquidity with long-term security. Apply now

Conclusion

A loan against your LIC policy is a powerful and convenient way to meet short-term financial needs, without selling off your investments or applying for unsecured loans. It offers flexibility, quick disbursal, and competitive interest rates while keeping your long-term coverage intact. If your policy qualifies, you already have what you need to access liquidity, without disturbing your long-term plans. Let your policy work for you today, while continuing to secure your tomorrow.

Have a ULIP or endowment policy? Your next loan may be just a few clicks away. Do not let delays or high interest rates weigh you down. Apply today