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If there is a need for money in an emergency, then most people take the help of a personal loan or arrange the money by breaking one of their policies. But if you have taken a LIC policy then you can take a loan against this policy also. Loan taken on LIC (Loan on LIC Policy) is usually cheaper than a personal loan, and repayment is also quite easy. 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-

Features of loan
A loan against 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 on 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 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 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 to 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 annual interest 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.

3 options to repay loan
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.
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.

Loan-related rules
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 of 80 to 90 percent of the surrender value of the policy.

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

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

The company has the right to terminate your policy if the loan is not repaid or if the outstanding loan 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. For offline, you will have to go to the LIC office and apply for a 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 documents online.

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