LIC policy can get you loan for your needs. Many of us not aware of this facility. I have explained in my previous articles about the different kind of loans and how to apply for it. Loans against 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.Also note that not all the policies are eligible for getting the loans, only the endowment policies can be submitted for the loans.
This article explores 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 or post it in the facbook fans page.
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 policy. 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 applying the loan if your need is huge 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 the interest charged on the loan is 9% and the minimum period loan is given if for 6 months.
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 insurers 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 principle 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.
I hope this article will be useful for the people who has the policy 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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