• 8459999458
  • aniketlic@gmail.com
  • 14/03/2019
    Times Now

    Loan against LIC policy: Why it is better than personal, gold loan

    New Delhi: The primary objective of buying a life insurance policy is to safeguard and provide security to your family in the event of your untimely demise. However, the benefit of an insurance policy is not just limited to providing cover and investment option. It can also be used as an option to secure a loan or in other words, used as collateral while opting for a loan. There are many insurance companies and banks that allow the policyholder to take a loan against an insurance policy. One important point worth mentioning here is that most of the banks do not provide loan against a unit-linked insurance plan (ULIP) that invests in market-linked products. 

    How loan against LIC policy is better than other loans

    1. The loan against LIC policy is less expensive as compared to personal loans, gold loans and loan against shares. This is because of the rate of interest which LIC charges is between 9 per cent to 11 per cent. Whereas, banks charge 16 per cent to 24 per cent interest on personal loans. 

    2. Unlike loans availed from banks, LIC doesn't charge any processing fees or money on prepayment of loans from the applicant.

    3. Another important feature is that on the successful repayment of loan against LIC policy, it allows the policyholder to take loans in the future as well. 

    4. It comes with financial flexibility feature where interest on the loan has to be paid twice a year. 

    5. It doesn't require any third party or guarantor.

    6. Unlike loans from banks, the loan disbursal is quite faster as policy is used as collateral. 

    7. While availing a loan against LIC policy, the credit score and income of the applicant doesn't matter much.

    Eligibility criteria-

    The eligibility for a loan against LIC policy is that the applicant should be an Indian citizen. The policyholder, must be at least 18 years old to avail a loan. The borrower should have paid insurance premium for three full years. His policy should be an endowment policy with a surrender value. In simple words, surrender value is the amount that policyholder will receive in case he surrenders the policy. The maximum amount of loan that can be availed cannot exceed 90 per cent of the surrender value.