Ever found yourself in a tight spot where you needed quick money but didn’t want to break your savings or sell your assets? That’s where a Loan against LIC Policy – Online Facility comes to the rescue! Instead of panicking or swiping your credit card at sky-high interest rates, you can actually borrow against the life insurance policy you already hold.
It’s like borrowing from your future self while keeping your coverage intact. Sounds interesting, right? With the online facility introduced by LIC (Life Insurance Corporation of India), the whole process has become smooth, paperless, and super convenient. You don’t need to stand in long queues or chase an LIC agent—you can manage everything with a few clicks.
But wait, how does this loan against LIC policy actually work? What’s the eligibility? And is it really better than a personal loan? Let’s break it down step by step.
What is a Loan against LIC Policy?
A Loan against LIC Policy is simply borrowing money using your LIC life insurance policy as collateral. Instead of surrendering your policy for its cash value, LIC allows you to take a loan against it.
Here’s the deal:
Your policy acts as security.
LIC lends you a percentage (usually up to 90%) of the surrender value.
You continue enjoying life cover while repaying the loan.
It’s a win-win: you get the much-needed funds, and your policy doesn’t lapse.
How Does the Loan against LIC Policy Work?
Think of it like pawning an asset but without losing ownership. Here’s how it works:
Check Eligibility – Only policies with a surrender value (like whole life, endowment, or money-back plans) qualify. Term plans don’t count because they don’t have a surrender value.
Apply Online – Use the LIC customer portal or app to request a loan.
Loan Sanction – LIC calculates the surrender value and sanctions up to 90% of it.
Fund Transfer – The approved loan amount gets credited directly to your bank account.
Repayment – You pay simple interest (quarterly or annually) and can repay the principal anytime.
It’s way quicker than running to a bank for a personal loan, and the interest rates are usually lower too.
Why Choose a Loan against LIC Policy – Online Facility?
So, why not just swipe your credit card or apply for a personal loan? Well, here’s why this facility stands out:
Lower Interest Rates – LIC loans typically have interest rates around 9–11%, which is cheaper than personal loans (12–24%) or credit cards (30–40%).
Hassle-Free Process – No credit check, no endless paperwork, no income proof required.
Quick Disbursal – Funds are transferred within a few days—sometimes within 24 hours.
Flexibility in Repayment – Interest-only repayment option; principal can be repaid later.
Policy Coverage Continues – Even with a loan, your life cover remains active.
Online Convenience – Apply, track, and repay—all from the comfort of your home.
Eligibility for Loan against LIC Policy
Not every LIC policyholder is eligible. Here’s what you need to qualify:
The policy must have acquired a surrender value (generally after 3 years of premium payments).
The loan facility isn’t available on term insurance or ULIPs.
Premiums must be up-to-date. If your policy is in lapse, you can’t apply.
Policyholders must have a valid LIC online account for online applications.
Documents Required for Online Loan against LIC Policy
Thanks to the online facility, documentation is minimal. Usually, you’ll need:
LIC Policy number
Registered mobile number and email
Bank account details (linked with LIC)
PAN or Aadhaar (if not already updated with LIC)
Since everything is integrated online, in many cases, you don’t even need to upload documents if your KYC is already verified.
Step-by-Step Guide to Apply for Loan against LIC Policy Online
Let’s make it simple:
Register/Login at LIC’s customer portal or LIC app.
Navigate to “Online Loan” under Policy Services.
Select your policy eligible for loan.
Enter bank details (if not already updated).
Submit the loan request.
E-sign (using Aadhaar OTP).
Wait for sanction and loan disbursal.
That’s it—no physical visits, no signatures on piles of forms!
Interest Rates on Loan against LIC Policy
The rate of interest on a loan against LIC policy is usually linked to LIC’s declared rates. For example:
As of recent updates, the rate hovers around 9–11% p.a.
Interest is charged on a half-yearly basis.
Unpaid interest gets added to the principal.
This makes it cheaper than personal loans, overdrafts, or credit card cash advances.
Repayment Rules
Repayment is flexible and borrower-friendly:
You can repay anytime during the policy term.
Only the interest must be paid regularly.
Principal repayment isn’t bound by EMI rules.
If you don’t repay before policy maturity, LIC deducts the outstanding loan from the maturity/survival benefit.
This ensures there’s no pressure like regular EMIs from banks.
Pros of Loan against LIC Policy
✔️ Quick and easy cash
✔️ No credit score check
✔️ Lower interest compared to personal loans
✔️ Flexibility in repayment
✔️ Policy remains active
Cons of Loan against LIC Policy
❌ Available only if your policy has surrender value
❌ Limited loan amount (depends on policy value)
❌ If unpaid, outstanding loan reduces maturity benefit
❌ Not ideal for very large funding needs
Loan against LIC Policy vs Personal Loan
| Factor | Loan against LIC Policy | Personal Loan |
|---|---|---|
| Interest Rate | 9–11% | 12–24% |
| Collateral | LIC policy | None |
| Approval Time | 1–3 days | 3–7 days |
| Credit Check | Not required | Mandatory |
| Repayment Flexibility | High | Fixed EMIs |
| Loan Amount | Depends on policy value | Higher limits |
Clearly, a loan against LIC policy is more pocket-friendly if you need small to medium funds quickly.
When Should You Take a Loan against LIC Policy?
It makes sense if:
You need urgent short-term funds (medical emergency, child’s education, travel).
You don’t want to disturb your savings or investments.
You’re looking for a cheaper alternative to a personal loan.
But avoid if:
You need a very high loan amount.
You’re unsure about paying back interest regularly.
Tips before Applying for Loan against LIC Policy Online
Always check the surrender value of your policy before applying.
Compare the interest rate with other loan options.
Pay at least the interest regularly to avoid compounding burden.
Avoid over-borrowing—take only what’s required.
Keep track of loan details on the LIC portal.
FAQs
Q1. Can I take a loan against any LIC policy?
No, only those policies with surrender value (like endowment or money-back plans) qualify. Term plans and ULIPs don’t.
Q2. What’s the maximum loan I can get?
You can borrow up to 90% of the surrender value of your policy.
Q3. Do I need a guarantor for the loan?
No, your policy itself acts as collateral.
Q4. How long does it take to get the loan?
With the online facility, you can get funds within 1–3 working days.
Q5. What if I don’t repay the loan?
The outstanding loan (including interest) will be deducted from your policy’s maturity or death benefit.
Q6. Can I repay the loan early?
Yes, you can repay partly or fully anytime without penalties.
Q7. Is the online loan safe?
Yes, the process is secured by LIC’s portal and Aadhaar-based e-signature authentication.
Conclusion
A Loan against LIC Policy – Online Facility is like having an emergency money cushion tucked inside your insurance policy. It’s faster, cheaper, and far less stressful than chasing personal loans or swiping credit cards.
By borrowing against your LIC policy, you’re not only unlocking funds but also ensuring that your life cover stays intact. Of course, it’s not the answer for everyone—if you need massive funds or struggle to manage repayments, you might want to explore other options.
But for most policyholders looking for quick, hassle-free liquidity, it’s a financial lifesaver. Next time you face a cash crunch, don’t stress—your LIC policy has your back!
