Loans against LIC Policy
- 19 Comment
Introduction
In this article I will be writing about the loan against LIC policy. As I have explained in my previous articles about the different kind of loans and how to apply for it. Loans agaist LIC policy is one of the good idea to get loans for cheaper price. It involves many restrictions because you will not be eligible to get huge loans under this scheme even if you have the policy. I will explain the conditions involved in getting the loan against LIC policy. If you have any doubts please post it in the comments section. Please subscribe to our future articles here.
What is Cash Value for LIC policy?
In my previous article I have explained what is surrender value?. Cash Value is also referred as the Surrender Value of the polciy. Before applying for the loan you must know the exact cash value of the policy because if it is very low then there is no point in applting the loan if your need is huge amount.
Loan on LIC
The provision of loan against a life insurance policy is basically an advance against the cash value (surrender value) of the policy. The advance is always less than the case value. Most of the insureres approve 90% of the cash value of the policy. In case a loan is provided, the policy is absolutely assigned and held by the insurance company as security for repayment of the loan.
- You have to pay the interest specified in the loan.
- If you failed to pay the interest on time, that will be added to the principla and calculated the interest.
- If the total dept is more than the cash value, the insurer has the rights to terminate your policy.
- If the policy is matured before completing the loan, insurer has the rights to deduct the loan amount from your maturity amount.
Summary
I hope this article will be useful for the people who has the polciy with good surrender value and need of urgent loan. If you apply for personal loans, the interest rates will be very high. This scheme will be very helpful. Thank you for reading the article. If you have any doubts please post it in the comments section.
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19 Comments on this post
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bhavin said:
Is it possible to give ECS instructions to LIC to deposit the maturity amount of LIC policy to specific bank account directly ?
Can you please suggest some process around it? Can it be done online / over the phone ?
September 23rd, 2009 at 2:19 am -
krishnas said:
Hello bhavin,
Normally you will get the post dated cheque for the maturity amount. I am not sure about whether ECS is allowed. I would suggest you to check with your agent. I you could not please let me know. I will inquire about the matter and inform you.
Thanks,
KrishnaOctober 3rd, 2009 at 8:36 pm -
chrishna said:
Thank a lot its very usefull for me.
Thanks once again.
October 23rd, 2009 at 9:01 am -
krishnas said:
HI chrishna,
Thank you for the comments.
Thanks,
KrishnaOctober 23rd, 2009 at 6:36 pm -
mitesh said:
I HAD TAKEN LOAN AGAINST MY 02 NOS JIVEN ANAND POLICY. I HAD PAID SEVEN YEAR PREMINUM BUT PRESENTLY I CAN NOT PAY THE INTEREST AGAINST MY LOAN. WHAT IS THE BEST OPTION TO RECOVER MY BALANCE AMOUNT.
PL GIVE ANY IDEA OR FEEDBACK REGARDING THIS MATTER.
THANKING YOU.
MITESH DIXIT
9925040466
VADODARANovember 11th, 2009 at 4:20 am -
krishnas said:
Hello Mitesh,
Try to pay the loan and continue the policy. If you are not able to continue, then you have to surrender the policy. They will deduct the loan and amount and pay you the balance value.
Free EMail Updates:
http://www.thinkplaninvest.com/subscribe/Thanks,
KrishnaNovember 11th, 2009 at 4:33 am -
asif said:
Could you please share the interest rate as well for loan against LIC policy for loan amt 5L-10L ?
I have Jeevan Anand policy . is loan available against it ?November 24th, 2009 at 2:39 am -
krishnas said:
Hello Asif,
Interest rates is not constant and it keep changing. I am not sure what is rate now. I would suggest you to contact the LIC agent and ask about it.
Thanks,
KrishnaNovember 24th, 2009 at 5:48 pm -
krishnas said:
Hello Asif,
I got these details from LIC site regarding the loans:
The Corporation can grant a loan to the policyholder against his policy as per the terms and conditions applicable to the policy. The requirements for granting a loan are as under :
a) Application for loan with an endorsement of terms and conditions of the loan being placed on the policy.
b) Policy to be assigned absolutely in favour of the Corporation
c) A receipt for the loan amount
The maximum loan amount available under the policy is 90% of the Surrender Value of the policy (85% in case of paid up policies) including cash value of bonus.
The rate of interest charged on loans is at 9% to be paid half-yearly.
The minimum period for which a loan can be granted is six months from the date of its payment. If repayment of loan is desired within this period the interest for the minimum period of six months will have to be paid.
In case the policy becomes a claim either by maturity or death within six months from the date of loan interest will be charged only upto the date of maturity/death.Thanks,
KrishnaNovember 24th, 2009 at 5:56 pm -
MAnoj said:
Could you please share the interest rate as well for loan against LIC policy for loan amt 5L-10L ?
November 29th, 2009 at 8:47 pm -
kuldeep said:
Dear sir,
I have a jeevan anand policy paying rs 24544 as an yearly premium and paying since last two years the policy is for 16 years i have an urgent requirement of a loan can i take against my policy.
Regards
KuldeepDecember 2nd, 2009 at 9:58 pm -
krishnas said:
Hello kuldeep,
Minimum it should be three years to take any loans against the LIC policy.
Thanks,
KrishnaDecember 2nd, 2009 at 10:51 pm -
Sunil Jha said:
Dear Team,
Can I get Loan against my Jeevan Saral Policy (165), Actually I Pay premium of Rs.5000/- per month & the risk cover is Rs.12,50,000/- so How Much I will get LOan Amount under this Policy??????????????????Awaiting for ur soonest reply.
Thks & Rgds,
Sunil Jha.January 22nd, 2010 at 12:24 am -
krishnas said:
Hello Sunil,
You have to contact the LIC office to know the details.
Thanks,
KrishnaJanuary 22nd, 2010 at 9:09 am -
Amit Singh said:
Hello Sir,
I have Jeevan Shree LIC policy and have paid 4 premium yet. I am eligible to take the loan against this policy. I opted for this policy in some other state and currently staying in different state and its not possible for me to go that that city LIC office to apply for loan.
I have all the original documents with me. Is it possible to get the loan from LIC in city where i am staying as of now. Awaiting your reply.Thanks,
AmitJanuary 22nd, 2010 at 10:21 am -
krishnas said:
Hello Amit Sigh,
Can you visit the nearest LIC office and check it. Take the original copy of LIC policy to show them.
Thanks,
KrishnaJanuary 22nd, 2010 at 5:51 pm -
sudhaker said:
Loans against LIC Policy
February 10th, 2010 at 9:42 pm -
Subhamoy ghosh said:
Dear Sir
i have one question pls tell me that i need loan against my polciy and i am paying the premium from 2002 jan onwards and till date i paid 2lacs 30 thousand premium and i need some loan but my policy will be active so can u suggest me what is the amount i have to pay as loan and what will be interest if it takes for 5 yrs.
March 4th, 2010 at 1:34 am -
bhakti said:
Sir,
Can the interest on loan taken against LIC policy be taken as deduction while calculating income from business? I ask this question considering that LIC maturity is exempt income and the loan has been used to earn taxable income.March 10th, 2010 at 12:42 am
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