Know how to get a Loan against LIC Policy

A life insurance policy is designed to provide financial cover to your family if something happens to you. Certain types of policies such as unit-linked and endowment plans also double up as investments. But now your insurance plan can also help you raise funds when you need it through a loan against insurance policy.

What is a Loan Against LIC policy?

A life insurance policy from LIC or other reputed private insurers is one of the securities you can use as a collateral to take a loan. 

Can I get a loan against any policy?

You can get a loan against a list of approved policies. These include unit-linked plans, endowment plans, whole life plans and income plans from many insurers. However, a term insurance policy may not entitle you to a loan.

How much loan can I get against my insurance policy?

You can get a loan against insurance policy starting at Rs 2 lakh, and up to 80% of the surrender value of the policy you pledge.

What do I need to do to get a loan against LIC policy?

Visit the nearest HDFC Bank and submit a filled-up Loan Against Security application form, the original policy document,  address, ID and income proof. The bank will inform you about details like loan eligibility, tenure and interest. If you are an existing HDFC Bank customer, you will need minimal documentation, and the turnaround will be faster.

How will the loan be paid out?

The Loan Against LIC policy is paid out as an overdraft into your HDFC Bank account. You can draw the funds from your account any time you want. The good thing about the loan is that you are liable to pay interest only on the amount you use and for the duration you use it. For example, if you have taken a loan of Rs 2 lakh, and you draw just Rs 20,000, you need to pay interest only on the drawn amount.

Looking to apply for loan against shares? Click here

* Terms & conditions apply. Loan disbursal at sole discretion of HDFC Bank Ltd