After completion of 3 years policy term on LIC products, the loan can be availed. The features which are available with this include New endowment plan, New Jeevan Anand, Single Premium Endowment Plan, New Bima Bachat, New money back plan, Jeevan Labh, Jeevan Lakshya and New Bima Diamond. The features which are not available include children’s plans, pension plans, ULIP plans and terms plans.
What is the eligibility for the loan?
- For policies with a premium payment term of 10 or more than 10 years, 3-year full premium payment should have been done for the policy to be eligible to take a loan.
- For policies with a premium payment term of fewer than 10 years, 2-year full premium payment should have been done for the policy to be eligible to take a loan.\
What is the interest rate?
Interest would be compounded annually which is flat 9.5% per annum charged on loan against the policy.
How is the loan calculated?
The limit for the loan can be checked below from the link provided.
https://policytray.com/LoanCalculator.aspx
Surrender value can be calculated from the below link.
https://policytray.com/SurrenderValueCalculator.aspx
Note: 80% of the surrender value can be taken as loan.
How is the loan re-payment?
There are two options for the borrower and they are as follows.
- The borrower can repay with his/her own funds and continue the policy which has to be paid before the policy term ends.
- The borrower can complete the premium payment and the maturity amount will be given after the deduction of the loan.
What are the suggestions to take?
Taking loan when the policy nearing maturity or taking higher sum assured will give you a higher loan amount. If you take a sum assured which is lower or if the loan was taken as early as 3rd year (surrender value would be less), you will receive a lower loan value.
What is the application process?
The person with the policy should submit a requisition letter to LIC home branch for a loan, along with bank details through which the loan amount would be sent through NEFT. The loan amount will be released within 7-10 days.
