Life Insurance Corporation of India (LIC) is the oldest and the vast insurance company that provides its subscribers with multiple insurance schemes to support them against various adverse events such as illness, death due to any circumstances.


LIC has always been known to provide multiple insurance schemes, but the fact that it also offers some personal loans is still a surprise to many. The LIC policies help people in their miserable times and provide complete financial support. The question about how to apply for a loan on LIC policy is answered in this article.

Key Benefits of taking a loan against LIC policy

Applying for a loan against LIC policy has become an easy procedure with time, and along with the ease, it also has a number of benefits to be considered:

  • If you are already a subscriber of a LIC policy, it becomes easy for you to get quick and instant personal loans against your life insurance policy.
  • It allows you to get a loan amount that equals 90% of your policy’s surrender value.
  • You can get a personal loan either from LIC or from other banks.
  • Minimal documentation is required to avail of this loan. No additional documents and CIBIL score will be needed.
  • Loans are quickly approved and disbursed due to its high security.
  • Interest rates are also least on such personal loans.


Conditions for availing loan against LIC policy

With all the key benefits of loan against LIC policy, certain conditions should be known before applying for such loans:

  • In such loans, interest is paid on a half-yearly basis, i.e., interest is calculated for every 6 months.
  • In case of the unfortunate death of the borrower, the insurer settles the claim with the nominee.
  • The borrower gets 30 days as the grace period to settle the loan, failing which; lender gets the authority to foreclose the policy.
  • The lender has the authority to ask the borrower for repayment of the loan with interest by sending a 3-month prior notice.
  • Such loans are not paid in EMIs, which results in more flexibility in loan repayment.
  • Applying for a loan against LIC should only be considered once your policy is old enough.


Interest rates on loan against LIC policy

  • The current interest rate on the LIC policy loan is around 10-12%.
  • Interest rates on such loans are usually lower than the rates on other personal loans. This feature makes this loan as one of the best options when it comes to applying for a loan.
  • The rate of interest on these loans keeps on varying from bank to bank.
  • One can apply for a loan against LIC policy either at LIC or other leading banks such as SBI, Bank of India, and others.
  • This loan gives the borrower an option to either pay both the principal and interest or pay only the interest. In the latter case, the principal sets off against the maturity value.


Eligibility Criteria to avail Loan against LIC policy

For availing a loan against LIC policy, it is important to know about its eligibility criteria:

  • The age of the borrower should be 18 years or more at the time of application.
  • The borrower should own at least one LIC policy that yields surrender value.
  • The borrower must be a permanent citizen of India.
  • Before applying for a loan against LIC policy, the borrower should have paid premiums for 3 years against the policy.
  • The loan value must be less than 90% of the surrender value. In case it exceeds the limit, the application will be rejected.


Availing a loan against LIC policy must be preferred due to the high security as well as the lowest interest rates that it provides. If you already own an LIC policy, availing a loan against it should be your priority to get it easily.