LIC Policy Loan Eligibility & Repayment Calculator
Avail liquid cash from your insurance assets without surrendering your policy. Model real-time loan caps up to 90% of your policy's surrender value, estimate the standard 9.5% p.a. half-yearly interest costs, and customize monthly EMI repayment schedules instantly.
Max Eligible Policy Loan
₹79,020
Based on 90% of Surrender Value
LIC Policy Loans: Guidelines & Actuarial Rules
An **LIC Policy Loan** is a highly efficient credit facility provided by the Life Insurance Corporation of India. It permits policyholders to access cash liquidity by borrowing against the accumulated **Surrender Value** of their active life insurance plans (such as endowment or whole-life policies). This loan represents a secured credit line, meaning you do not undergo extensive credit score evaluations or CIBIL screening, and your active life insurance coverage remains **100% active** during the loan period.
Lending LTV Slabs: Policy Standing Rules
The maximum amount you can borrow depends directly on your policy's current active status and standing:
| Policy Standing Status | Maximum Loan Limit (LTV) | Lending Features |
|---|---|---|
| In-Force Policy | 90% of Cash Surrender Value | Full coverage active, standard mode rebates applicable |
| Reduced Paid-Up Policy | 85% of Cash Surrender Value | Reduced sum assured death cover, no future premiums required |
| Lapsed Policy (Under 2 Yrs) | 0% (Not Eligible) | Policy has not acquired cash value yet. Pay premiums to reach 2 consecutive years. |
Understanding LIC Loan Compounding & Repayments
LIC charges highly competitive interest rates compared to unsecured personal loans, operating under strict regulatory criteria:
Half-Yearly Interest Compounding
The interest rate is set at **9.5% p.a.** and is compounded half-yearly. Interest payments are due every 6 months on fixed dates:
6-Month Interest = Loan Outstanding × (9.5 / 100) / 2Policy Foreclosure Cap
If you defer interest payments, the unpaid interest adds to your principal. If the total outstanding exceeds the Surrender Value:
Foreclosure Condition: (Principal + Unpaid Interest) > Policy Surrender ValueTax Benefits & Settlement Mechanics
LIC policy loans operate under highly flexible tax and settlement structures matching standard financial planning rules:
Automatic Payout Deductions
You are not legally forced to repay the loan principal during your policy term. If left unpaid, the outstanding principal + accrued interest will be simply deducted from your final tax-free maturity claim or death claim proceeds.
Zero Processing Fees & CIBIL Checks
Because the loan is fully secured by your policy's cash reserves, LIC charges zero processing fees. In addition, there is no CIBIL credit score check or income proof documentation required for approval.
Repayment Options & Grace Periods
Borrowers can structure their repayment plan using two major pathways:
- Interest-Only Repayment: You pay only the half-yearly interest amount charged on your loan. The principal remains intact and is cleared at maturity.
- EMI / Part Payment: You can pay back any portion of the principal along with interest at any time in lump sums. Alternatively, you can repay the loan in monthly or quarterly installments over a 1 to 5 year tenure.
Frequently Asked Questions (FAQs)
Which LIC policies are eligible for securing a policy loan?
What is the minimum premium payment duration required to get a loan?
What happens if the policyholder passes away while the loan is active?
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