Why Opt for a Loan Against LIC Policy?

Have you ever found yourself in sudden need of funds, perhaps for medical emergencies, education, or a business opportunity, but did not want to break your long-term investments? A loan against your LIC policy could be the ideal solution. This secured loan allows you to borrow funds against the surrender value of your existing life insurance policy. It offers quick liquidity without the stress of selling or surrendering your policy prematurely. Essentially, you get the financial flexibility you need while your policy continues to stay active and earn returns.

Need urgent liquidity without losing your insurance coverage? Apply for a loan against your insurance policy and unlock funds instantly.

A loan against an LIC policy is a type of secured loan where your life insurance policy serves as collateral. Instead of liquidating your investments or breaking your savings, you can borrow a percentage of your policy’s surrender value. This option is available for policyholders who have built up a reasonable surrender value, typically through the regular payment of premiums for at least three years in traditional (endowment) or ULIP policies.

The loan amount is disbursed quickly, as lenders already have the policy as security, reducing documentation and approval delays. The policy remains active throughout the loan tenure, ensuring your financial protection continues.

To qualify for a loan against your LIC policy, you must meet specific eligibility criteria. These requirements ensure the policy’s financial worth and your repayment ability are adequately assessed. Key eligibility conditions include:

• Policy value available: The policy must have built-up value (i.e., has acquired a policy value or surrender value).
• Loan limit: You can borrow up to 80% of that policy value. 
• Policy status: The policy should be active, not lapsed.
• Ownership: You must be the owner of the policy (or, in the case of joint ownership, follow the insurer’s guidelines).
• Lock-in policies may be accepted: Even policies in their lock-in phase (e.g. first few years) may be eligible for such a loan

Meet the simple eligibility criteria and get a loan against your insurance policy without lengthy paperwork or approvals.

The amount you can borrow depends on the surrender value of your LIC policy, not the total sum assured. The surrender value is the amount payable if you choose to discontinue your policy before maturity. Most lenders provide up to 80% of the surrender value as a loan. For example, if your policy’s surrender value is Rs. 10 lakh, you could typically borrow Rs. 8 to 9 lakh. Your eligibility might also vary based on the type of policy, endowment, or ULIP, as ULIPs fluctuate with market performance, affecting the loanable amount. This system ensures you can access funds quickly while your insurance protection remains intact, offering a balance between liquidity and security.

Interest rates for loans against LIC policies are generally lower compared to personal loans or credit cards because they are secured by the policy’s surrender value. Here are a few pointers to understand how rates work:

• Linked to policy type: Traditional policies usually attract stable, fixed rates, whereas ULIP-based loans may vary slightly due to market-linked returns.
• Range of rates: Typically, interest rates fall between 8% and 24% per annum, depending on the insurer’s terms and tenure.
• Payment flexibility: You can choose to pay only the interest during the loan term and repay the principal at maturity.
• Automatic adjustment: If repayments are delayed, the unpaid interest can be adjusted against the policy’s surrender value.

This setup makes loans against LIC policies an affordable and convenient financing option for emergencies or planned expenses.

A loan against an LIC policy offers several key benefits that make it an attractive financial tool for managing liquidity needs without compromising long-term goals. Major advantages include:

• Fast disbursal: As the policy is already held, processing is quicker than a fresh unsecured loan.
• Up to 80% funding: You can unlock a high proportion of your policy value without surrendering it.
• Lower risk to you: Since it’s secured, there is minimal risk of being rejected based on credit history.
• Policy remains intact: Your life cover and associated benefits continue even after borrowing.
• Interest only on balance: You pay interest only on what you’ve borrowed and not on unused limits.
• No income proof needed: Your policy value serves as security, so lenders often skip demanding detailed income documents.

Applying for a loan against your LIC policy is a simple and straightforward process. The steps can be completed online or offline, depending on your preference. Follow these steps:

1. Check if policy is eligible: Confirm that your policy has sufficient policy value.
2. Access application portal: Visit the insurer’s loan-against-policy card/portal or branch.
3. Fill the application form: Provide policy number, desired loan amount up to 80%, nominee, and contact details.
4. Submit KYC and policy documents: Upload or submit identification, address proof, and original policy document.
5. Verification and approval: The insurer evaluates the current policy value and verifies documents.
6. Disbursement: Funds are typically transferred to your linked bank account within a few working days.

This streamlined route means you can often get the required funds quickly, without complex underwriting.

Get hassle-free access to funds with a loan against your insurance policy, quick, simple, and fully secure.

Lenders require basic documentation to verify your identity, ownership of the policy, and bank details. Essential documents include:

• Completed application form for the loan
• Original LIC policy document
• PAN or any one of the Offically Valid Documents (Aadhaar, Passport, Driving License, Voter ID Card, Letter issued by National Population Register, NREGA job card,)
• Recent passport-size photographs
• Bank account details or a cancelled cheque for disbursal

Once these are submitted, lenders typically process the loan in 24–48 working hours*, making it one of the most convenient secured loan options available.

Opting for a loan against your LIC policy can be a wise financial move when you need quick funds without breaking long-term investments. It offers a balanced mix of liquidity, security, and affordability. You get immediate access to funds while your life cover stays intact. Whether for medical emergencies, education, or personal commitments, this type of loan ensures that you do not have to compromise your future savings or insurance benefits. So, the next time you wonder “Why should you opt for a loan against LIC policy?”, remember that it provides instant liquidity, low interest, and continued coverage all without the stress of new documentation or credit checks.

Need quick funds while keeping your life cover active? Apply for a loan against your insurance policy and unlock your policy’s value today.