A detailed guide on Loan against LIC Policy
LIC is one of India’s leading public insurance companies that offers a wide range of products for customers in the markets. It has high claim settlement ratios that satisfy the needs of policyholders with various features. While buying a LIC policy, customers should know the eligibility and other things in detail that will help invest money depending on the needs. Moreover, they can pick a plan based on their requirements and budget. The LIC plans are ideal for economically weaker sections to get coverage for the untimely death of an earning member.
LIC offers loan facilities for policyholders when they need money for home construction, marriage, education, and other purposes. Policyholders can get a loan against LIC plans that will help accomplish goals in life. LIC will calculate the loan amount based on the surrender value allowing policyholders to gain more benefits. On the other hand, it is wise to know how to apply for a LIC loan from various sources. This loan is a personal loan that lets policyholders manage the financial burden during difficult situations.
What are the advantages of taking a LIC policy loan?
- The loan process is very simple when compared to bank loans that will help save more time.
- LIC loans are available at a low-interest allowing policyholders to repay them with ease
- There is no need to pay any processing fees while buying a plan
- Policyholders can repay the loan amounts at any time during the policy period without installments
- Allows policyholders to borrow high-value loans for various purposes
Things to know before taking a policy loan from LIC
- The loan is available only for policyholders who have LIC endowment plans.
- LIC reserves the right to terminate the policy when the debt exceeds the surrender value of the policy
- Policyholders will get only limited amounts based on the surrender value that is not sufficient to cover the financial requirements.
- It is not possible to use a LIC policy as collateral for getting other loans from the markets.
- LIC will reduce the maturity and death benefit when policyholders don’t repay the loan amounts
- The minimum loan tenure is 6 months.
How to calculate the interest rates of LIC policy loans?
Those who want to apply for a loan on LIC policy should calculate the interest rates correctly that will help make the right decision. They should consider using an online calculator to provide methods to determine the interest rates accurately. The loan against LIC policy calculator is the best technique for comparing interest rates that will help select amounts based on the choices. In addition, loan borrowers can determine the loan amounts and other things with the calculator that gives ways to accomplish goals in life.
What are the factors that can affect LIC policy loans?
People who have a LIC policy should know the factors that will influence the interest rates of loans. This, in turn, gives ways to make the right decision while applying for a loan.
- Income level: The income level of a policyholder will affect the loan interest rates because applicants with high income have to pay only a lower rate of interest rates. Therefore, it is essential to consider the income while buying a LIC loan.
- Loan amounts and tenure: Loan amounts and tenure are other factors that can influence the interest rates when it comes to LIC loans. Loans with higher amounts and more extended repayment come with high- interest rates.
- Organization reputation: The reputation of a working organization will also affect the interest rates while purchasing LIC loans. Hence, it is wise to check the reputation of a company before applying for a LIC loan.
- Repayment History: LIC will check the premium payment history of policyholders when offering a loan. Paying premiums on time will help lower the interest rates of LIC loans.
How to get a loan against LIC policy?
Anyone who wants to get a personal loan against LIC policy should know the guidelines from various sources. In addition, people can apply for a loan through offline and online mode that gives ways to obtain funds during emergencies.
A policyholder can approach the nearest LIC branch office and fill out an application form with the necessary documents. Apart from that, he/she can even choose the online mode for loan processing that will help save more time.
The first step is to visit the official website of LIC and choose” online loan,” which will redirect to a new page. Then, loan borrowers can request an online LIC loan by clicking “Through customer portal.” Next, they should provide the ID, password, and date of birth to proceed further to complete the registration process.
In the next step, policyholders should log into their LIC account and select the loan amount correctly. The final step is requesting a loan, and the company will process the same as soon as possible.
What are the documents needed for a LIC policy loan?
Loan borrowers should submit copies of the following documents when they want to process a loan against LIC policy online for a quick approval process.
- Address proof
- ID proof
- Income proof
- Original policy document
- Deed of assignment
Types of LIC plans eligible for loan amounts
Not all LIC plans offer loans for policyholders, and they should evaluate them with more attention that will help gain more benefits. For example, those with a purchased term insurance plan and ULIP plan are not eligible for loans. However, a policyholder with an endowment plan, money-back plan, and whole life insurance plan is suitable for a LIC loan that will help meet essential needs.
Why is taking a LIC policy loan the right choice?
LIC loans come with low-interest rates when compared to other loans. Customers can even save money on processing fees, hidden charges, and high-interest rates after choosing a LIC loan. Not only that, the company doesn’t check the credit score of loan borrowers while offering loans to policyholders.