Insurance policies serve as a great instrument to tackle any unfavourable situation and are even beneficial after retirement. Most of the life insurance policies come with the due benefits of savings component and insurance coverage. You can also use your life insurance policies, such as LIC policies, to avail loans. Many insurance plans offered by the Life Insurance Corporation of India (LIC) are eligible for loans.
How much money can you get under a loan against an insurance policy?
Most of the LIC policies and life insurance plans offered by other insurers come with the loan eligibility component. This means that loan can be availed against the life insurance policy by pledging it to lenders. Most of the LIC endowment plans are eligible for loan facilities. The loan amount is decided based on the surrender value of the life insurance plan.
The borrowers can get up to 85 to 90 per cent of the surrender value of the LIC policy. For instance, if the surrender value of your insurance policy is Rs 5 lakh you can avail loans up to Rs 4.5 lakh.
The interest rate on loan against insurance policy could vary depending on the lender. The Life Insurance Corporation of India offers loans against LIC policies at an interest rates starting at 10 per cent per annum.
Advantages and Disadvantages of a loan against insurance policy