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If there is an emergency need for money, then most people take the help of a personal loan or arrange money by breaking one of their policies. But if you have taken LIC Policies, then you can take a loan against this policy also. A loan taken on an LIC is usually cheaper than a personal loan, and repayment is also quite easy (LIC Policy Loan). In such a situation, you do not have to worry about paying EMI every month. Know here all the rules and features related to LIC's loan facility-

Benefits of loan against LIC
     A loan against an LIC policy comes under the category of a secured loan because the loan guarantee is your life insurance policy. In such a situation, there is no need for much paperwork and the loan is available quickly. The customer can get the loan amount only in a period of 3 to 5 days.

     One advantage of a loan against LIC is that you do not have to surrender your policy. In such a situation, the benefits you get from insurance do not end.

     This loan is cheaper than a personal loan, and there are no processing fees (LIC Personal Loan benefits) or hidden charges while taking it. In such a situation, additional loan costs are saved.

Repayment is quite easy
If you take a loan against LIC policy then its repayment (Loan Repayment Process) is quite easy. In this, the borrower gets a good amount of time to repay the loan because the loan period can be from a minimum of six months till the maturity of the insurance policy. In such a situation, the good thing for the customer is that there is no tension of paying EMI every month on this loan. As the money gets accumulated, you can give the money accordingly. But one thing should be kept in mind the annual interest (Loan Interest on LIC) will keep getting added to it. If a customer settles the loan within the minimum period of 6 months, he has to pay interest for the entire period of 6 months.

Loan repayment options

     Repay the entire principal amount along with interest.

     Settle the principal amount along with the claim amount at the time of maturity of the insurance policy (how to repay the loan). In such a situation, now you will have to pay only the interest amount.

     Pay the interest amount annually and repay the principal amount separately.

Rules related to loan repayment
     Loan against insurance policy is available only against some selected policies like traditional and endowment policies.

     The loan amount is decided according to the surrender value. You can get a loan up to 80 to 90 percent of the surrender value of the policy.

     The interest rate of the loan policy depends on the profile of the loan policyholder. Usually, it ranges from 10 to 12 percent.

     While giving a loan against the policy, the insurance company pledges your policy.

     The company has the right to terminate your policy if the loan is not repaid or if the loan outstanding amount exceeds the surrender value of the policy.

     If your insurance policy matures before repaying the loan, then the insurance company can deduct the loan amount from your account.

How to apply for a loan
To take a loan against the policy, you can apply both online and offline (how to apply for LiC policy). For offline, you will have to go to the LIC office and apply for the loan along with KYC documents. To apply online, register for LIC e-Services. After this log in to your account. After this, check whether you are eligible to get the loan to exchange your insurance policy or not. If yes, then read carefully about the loan terms, conditions, interest rates, etc. After this apply and upload the KYC (LIC KYC Process) documents online.

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