A LIC Policy Loan EMI Calculator helps you calculate the monthly installment (EMI) for loans taken against your LIC policy. LIC policy loans are a convenient way to access funds using your life insurance policy as collateral, offering competitive interest rates and flexible repayment options without affecting your policy benefits.
How LIC Policy Loan EMI is Calculated
LIC policy loan EMI is calculated using the standard EMI formula:
EMI = [P × R × (1+R)^N] / [(1+R)^N-1]
Where: P = Principal, R = Monthly Interest Rate, N = Tenure in Months
Key Features of LIC Policy Loans
- No Credit Check: Loan approval based on policy value, not credit score
- Lower Interest Rates: Competitive rates from 8% to 12% per annum
- Policy Continues: Your insurance coverage remains active during loan tenure
- Flexible Repayment: Various EMI options and prepayment facility
- Quick Processing: Instant approval and disbursal within 2-3 days
- High Loan Amount: Up to 90% of policy surrender value
- No Penalty: Generally no prepayment penalties
Eligible LIC Policies for Loans
Eligible Policy Types:
- Endowment Plans
- Whole Life Plans
- Money Back Plans
- ULIPs (Unit Linked Insurance Plans)
- Pension Plans
- Special Plans with surrender value
Non-Eligible Policy Types:
- Pure Term Insurance Plans
- Group Insurance Policies
- Policies without surrender value
- Lapsed policies (unpaid premiums)
- Policies under investigation
- Assigned policies (some cases)
LIC Policy Loan Interest Rates
| Policy Type |
Interest Rate |
Max Loan % |
Processing Time |
| Endowment Plans | 9.00% - 10.00% | 90% | 2-3 days |
| Whole Life Plans | 9.00% - 10.00% | 90% | 2-3 days |
| Money Back Plans | 9.50% - 10.50% | 85% | 2-3 days |
| ULIPs | 10.00% - 11.00% | 80% | 3-5 days |
| Pension Plans | 9.50% - 10.50% | 90% | 2-3 days |
LIC Policy Loan Eligibility Criteria
- Policy Age: Policy should be at least 3 years old (for most plans)
- Premium Payment: All due premiums should be paid
- Surrender Value: Policy must have acquired surrender value
- Policy Status: Policy should be in force and not lapsed
- Loan Limit: Maximum 90% of surrender value can be borrowed
- Age Limit: No specific age limit for policyholder
Documents Required for LIC Policy Loan
- Original Policy Document
- Latest Premium Receipt
- KYC Documents (Aadhaar, PAN Card)
- Bank Account Details
- Policy Loan Application Form
- Identity and Address Proof
- Passport size photographs
How to Apply for LIC Policy Loan
- Online Application: Apply through LIC online portal or mobile app
- Branch Visit: Visit nearest LIC branch with required documents
- Agent Assistance: Contact your LIC agent for assistance
- Document Verification: Submit required documents for verification
- Loan Processing: LIC will process your application within 2-3 days
- Loan Disbursal: Amount will be credited to your bank account
Advantages of LIC Policy Loans
- No Credit History Check: Approval based on policy value only
- Lower Interest Rates: Cheaper than personal loans and credit cards
- Policy Remains Active: Insurance coverage continues during loan
- Flexible Repayment: Choose EMI tenure as per convenience
- Quick Processing: Fastest loan approval and disbursal
- No Income Proof: Policy value serves as income proof
- Partial Prepayment: Option to pay partially anytime
Things to Consider
- Reduced Death Benefit: Outstanding loan amount will be deducted from death claim
- Interest Accumulation: Unpaid interest gets added to principal amount
- Policy Lapse Risk: Non-payment may lead to policy lapse if loan exceeds surrender value
- Bonus Impact: Some policies may have reduced bonus during loan period
- Tax Implications: Interest paid is not tax deductible under current rules
Tips for LIC Policy Loan Planning
- Calculate the total cost including interest before taking loan
- Choose the shortest possible tenure to minimize interest
- Ensure regular EMI payment to avoid policy lapse
- Monitor your policy's surrender value regularly
- Consider prepayment if you have surplus funds
- Keep track of interest rates and consider refinancing if rates drop
- Maintain adequate life cover after accounting for loan outstanding
LIC Policy Loan vs Other Loans
| Feature |
LIC Policy Loan |
Personal Loan |
Gold Loan |
| Interest Rate | 9-12% | 12-24% | 8-24% |
| Processing Time | 2-3 days | 1-7 days | Same day |
| Credit Check | No | Yes | No |
| Collateral Risk | Policy benefits | None | Gold jewelry |
| Documentation | Minimal | Extensive | Minimal |
Frequently Asked Questions
What is the maximum amount I can borrow against my LIC policy?
You can typically borrow up to 90% of your policy's surrender value. The exact amount depends on your policy type and the premiums paid.
Will my policy coverage be affected during the loan period?
Your policy remains active, but the death benefit will be reduced by the outstanding loan amount plus accumulated interest.
What happens if I don't repay the LIC policy loan?
If the outstanding loan amount exceeds the surrender value, your policy may lapse. It's important to maintain regular payments.
Can I take multiple loans on the same policy?
No, you can have only one active loan per policy. You need to clear the existing loan before applying for a new one.