How to Take a Loan on Your LIC Policy

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How to Take a Loan on Your LIC Policy

Written by Vishmadev Parida

12 September 2025

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Many people think their LIC policy is only for protecting their family in the future. But if you have a ULIP or endowment policy, it can be more than that. Yes, it can also be a useful financial tool. These types of policies can help you plan for retirement or grow your wealth over time.

But did you know you can also use them to get quick money in an emergency? Instead of breaking your savings or selling your investments, you can take a loan against your policy. This way, you get the money you need without losing your policy benefits.

Now, you might be wondering how to apply for a LIC policy loan and other related information. In this blog, let’s get into these details that help you in making the right decision at the right time.

What Are LIC Policy Loans?

LIC gives loans on some of its life insurance policies, but only if your policy has a surrender value. A surrender value is the money you get if you stop your policy early, usually after paying for 2 to 3 years.

1 Here are some important things that you need to know about LIC policy loans:

You can get up to 90% of the surrender value if your policy is active. If it’s a paid-up policy, you can get up to 80%.
You must repay the loan with interest, which is charged every 6 months. If you don’t pay, LIC may take the money from your policy benefits.
LIC decides the interest rate every year. It usually starts from 9%.
You can apply for a loan only if your policy has been active for at least 6 months.

Types of LIC Policies Eligible for Loans

LIC has many types of insurance plans for different needs like life protection, saving money, retirement, or your child’s education. Some common LIC policy types are:

Term insurance plans
Whole life insurance
Endowment plans
Money-back policies
Pension plans
ULIPs (Unit Linked Insurance Plans)

But not all of these policies let you take a loan. Usually, only endowment plans and ULIPs are allowed for loans. Term insurance plans don’t offer loans because they are only for life cover and don’t have any savings or money value you can borrow from. So, if you have an endowment plan or ULIP, you can borrow money from it without losing your policy or its benefits.

LIC Policy Loan Eligibility

If you want to take a loan on your LIC policy, you need to meet some simple conditions. Here’s what you should know about LIC policy loan eligibility:

You must be 18 years or older when you apply for the loan.
Your LIC policy should be active, not lapsed or cancelled.
The policy must be an endowment plan or a ULIP.
You can get a loan of up to 90% of the policy's surrender value.

Surrender value is the amount you get if you stop your policy early. This value grows as you keep paying your premiums. So, the longer you keep your policy active, the higher your surrender value, and the more loan amount you can get.

Documents Required for Your LIC Policy Loan

Getting a loan on your LIC policy is easy. You only need a few papers. Here’s what you need:

1 Types of Documents:

Loan application form: Fill out the form fully.
Original policy paper: Bring your LIC policy (ULIP or endowment).
ID proof: Like PAN Card, Aadhaar Card, or Voter ID.
Address proof: Like a utility bill, passport, or Aadhaar card.
Bank proof: A copy of your bank passbook or bank statement.

These papers help LIC check your details and give you the loan. Make sure your policy is active and your KYC (identity details) are updated.

How to Take a Loan on an LIC Policy

With LIC, you can easily get a loan on your LIC policy online and offline. Here’s how you can do it:

1 Offline Process

Step 1: Go to an LIC Branch: Find the nearest LIC branch and ask for a loan application form.
Step 2: Fill and Submit the Form: Complete the form and you need to attach all the documents.
Step 3: Verification: The LIC branch will check your details and process your request.
Step 4: Loan Approval: Once your loan gets approval, it will be sent to your account in 3-5 days.

2 Online Process

LIC also lets you apply for a loan online if you're a registered user.

Step 1: First, you need to visit the official LIC website.
Step 2: Under "Online Services," click on "Online Loan."
Step 3: Log in with your User ID and password, or register for "Premier Services."
Step 4: Choose the policy you want the loan for.
Step 5: Enter details like loan amount, repayment options, and loan time.
Step 6: Upload the required documents and submit your request.
Step 7: Provide your bank account details to receive the loan directly.

Benefits and Risks of Taking a Loan on an LIC Policy

1Advantages

Lower Interest Rates Than Other Loans: The interest rate on an LIC policy loan is usually lower than loans without security, like personal loans. This means you will pay less money in interest.
Your LIC Policy is Enough as Collateral: You don’t need to offer anything new as security. Your LIC policy itself is enough to get the loan.
Fast and Easy Process: It’s easy and fast to apply for a loan. You don’t need to submit a lot of documents which makes the process easy and quick.
Keep Your Investments Safe: You don’t have to sell or end your current investments to take this loan. You can keep them, and they continue to grow.

2Risks

Unpaid Interest Can Lower Your Policy's Value: If you do not repay the loan interest, the overall value of your policy when it matures (ends) may be less than you planned.
Not Paying the Loan Can End Your Policy: If you do not repay the loan, your coverage may terminate or expire. This means you may lose all of the advantages of your policy.
You Can Only Borrow What Your Policy Is Worth: You can only borrow as much as your policy is worth. The amount of money you can borrow is determined by how much your insurance is worth if you cancel it. So you can't borrow more than that amount.

Conclusion

Taking out a loan against your LIC policy is a good approach to get money in an emergency without compromising your policy advantages. It's quick, simple, and offers lower interest rates than other loans. Before asking for a loan, confirm that your policy is eligible and that you understand the terms and conditions.

In short, if you have a ULIP or endowment plan, getting a loan might be a useful tool for dealing with unexpected expenses. Simply make sure to repay the loan on time to avoid any issues with your coverage.

FAQs

No, you can only take a loan on policies like ULIPs or endowment plans, which have a surrender value. Term insurance policies do not allow loans.

To check your LIC policy loan status, you can visit the LIC branch or log in to the LIC website. Once logged in, you can find your loan status in the "Loan" section.

You can get the LIC policy loan application form at any LIC branch. You can also download it from the LIC website if you want to fill it out at home.

Yes, you can fill the LIC policy loan form online by logging into the LIC customer portal. You can then complete the form and submit your loan request directly from your computer or phone.

To be eligible for a LIC policy loan, you need to have an active LIC policy, like an endowment or ULIP policy. You must also be 18 years or older, and your policy should have a surrender value.

You can download the LIC policy loan form PDF from the official LIC website. Just go to the "Loan" section and find the option to download the form.