There is no single best LIC policy. Here are the currently sold LIC plans that fit each goal, from term cover to pension, with real premium examples.
Quick answer
LIC gives a loan against traditional savings policies (endowment, money back, whole life) once they have a surrender value, usually after two full years of premium. You can borrow up to 90% of the surrender value on an in-force policy and up to 80% on a paid-up one. Interest is charged half-yearly at the rate LIC sets for your plan, and anything unpaid is deducted from the maturity or claim amount.
A LIC loan against policy lets you borrow money from LIC using your own endowment, money back or whole life policy as security. You can usually take up to 90% of the policy’s surrender value, pay interest every six months, and keep the life cover and bonuses running. It is often cheaper and quicker than a personal loan, but an unpaid loan quietly eats into your maturity amount.
This guide covers who is eligible, how much you can get, how interest works, how to apply online and at the branch, and a worked example with real numbers. We are an independent site, not LIC, so treat every figure here as an estimate and confirm it in your own loan quotation.
Which LIC policies give a loan?
A policy loan is secured against the surrender value, so only policies that build one are eligible.
| Policy type | Loan available? | Notes |
|---|---|---|
| Endowment (New Endowment, Jeevan Labh, Jeevan Lakshya) | Yes | Once a surrender value exists |
| Whole life (Jeevan Umang, Jeevan Anand) | Yes | Same rule |
| Money back (Bima Shree, New Money Back) | Yes | Survival payouts already made reduce the surrender value |
| Pure term (Tech Term, Jeevan Amar) | No | No surrender value |
| ULIPs (SIIP, Nivesh Plus) | No | Unit-linked plans do not offer a policy loan |
| Annuity / pension plans | Some options only | Check your plan’s loan clause |
After how many years? It depends on when your plan was launched:
- Older plans (before 2014): usually after three full years of premium.
- Plans sold roughly from 2014 to September 2024 (the 8xx and 9xx series such as Jeevan Labh 936): after two full years.
- Plans launched from October 2024 (the 7xx relaunches such as Jeevan Anand 715 and Jeevan Labh 736): these follow IRDAI’s 2024 product rules, under which the surrender value, and so the loan, can start earlier, in some plans after one full year. Your policy document is the final word.
The policy must also be in force or paid-up with a surrender value. A lapsed policy has to be revived before you can borrow against it.
How much loan can you get?
LIC works out the loan as a percentage of the surrender value on the date of the loan:
- In-force policy (all premiums paid to date): up to 90% of the surrender value.
- Paid-up policy (premiums stopped after the policy acquired a surrender value): up to 80%.
Any existing loan and unpaid interest are deducted first. Because surrender value grows with every premium and every bonus added, the eligible loan grows each year too. You can estimate yours with our LIC surrender value calculator, which also shows a “loan eligible” figure at 90%.
LIC policy loan interest rate and how it is charged
LIC decides the loan interest rate and can revise it. We could not find a single current rate published for all plans, so here is what is consistent across sources as of September 2026:
- Older traditional plans have commonly been charged in the 9% to 10% a year range.
- Newer plans state a formula in the policy terms, for example a rate linked to the 10-year government bond yield plus a margin, reset from time to time.
- Interest is calculated on a half-yearly basis. It is due every six months, usually on the policy anniversary or the half-year after it.
- The minimum interest period is six months, even if you repay sooner.
- Interest you do not pay is added to the loan, and the next interest is charged on the higher amount. That is effectively half-yearly compounding.
The loan quotation on the LIC customer portal, or the one your branch gives you, shows the exact rate for your policy. Read it before you sign.
How to apply for an LIC loan online
LIC offers online loans through its official customer portal (licindia.in) and official app for registered users. The general steps are:
- Log in to the customer portal with your own registered account. Never let an agent or caller log in for you.
- Open the loan section and check the loan quotation for each eligible policy. It shows the maximum amount, interest rate and due dates.
- Make sure your KYC (PAN, Aadhaar) and bank account (NEFT mandate) are registered for the policy. The money is paid only by bank transfer.
- Enter the amount you need and submit the request. You authenticate with an OTP or e-sign on your registered mobile number.
- Follow any instruction to submit documents. For some policies LIC may still ask for the original policy bond at the branch.
Once approved, the amount is credited to the registered bank account. Timelines vary, but online requests are usually quicker than branch requests.
How to apply offline at the branch
- Visit your servicing branch (it is printed on your policy bond and premium receipts).
- Fill in the loan application form and the NEFT mandate form.
- Attach the original policy bond, self-attested ID and address proof, PAN, and a cancelled cheque.
- The policy is assigned to LIC as security for the loan. You get it back once the loan is repaid.
- LIC verifies the papers and pays the loan into your bank account.
Repayment, and what happens if you don’t repay
There are no EMIs. You only need to pay interest every six months. You can repay the principal whenever you like, in one go or in parts, through the portal or at a branch.
If you leave it unpaid:
- At maturity: LIC deducts the loan plus unpaid interest from the maturity amount and pays you the balance.
- On death: the nominee gets the death benefit minus the outstanding loan and interest.
- If the loan outgrows the surrender value: LIC can foreclose the policy after notice. It adjusts the loan against the surrender value and the policy ends, and so does your life cover.
Our guide to the LIC maturity claim process explains how the final payout is settled.
Worked example: a loan on a Jeevan Anand-type policy
Rahul has a traditional with-profit policy with ₹5 lakh sum assured, a 20-year term and a yearly premium of ₹25,000. He has paid 7 years of premiums. We ran these inputs through the surrender value calculator, with an assumed bonus of ₹45 per ₹1,000:
| Item | Estimate |
|---|---|
| Premiums paid so far | ₹1,75,000 |
| Bonus accrued (estimate) | ₹1,57,500 |
| Estimated surrender value | ₹1,37,976 |
| Maximum loan (90% of surrender value) | ₹1,24,178 |
He borrows ₹1,20,000. For illustration only, assume an interest rate of 10% a year, charged half-yearly:
- If he pays interest on time: ₹6,000 every six months (₹12,000 a year). The loan stays at ₹1,20,000.
- If he pays nothing for 3 years: the loan grows to about ₹1,60,811 (₹1,20,000 × 1.05⁶).
- If he pays nothing until maturity (13 more years, 26 half-years): the loan grows to about ₹4,26,681.
The LIC maturity calculator, with the same inputs and a final additional bonus of ₹100 per ₹1,000, estimates a maturity value of about ₹10,00,000. An unpaid loan would cut that to roughly ₹5,73,319. Paying just the interest keeps about ₹8.8 lakh of the maturity amount intact (₹10,00,000 − ₹1,20,000).
Tip: if you take a policy loan, at least pay the half-yearly interest. It stops the loan from compounding against your maturity money.
LIC loan vs surrender vs personal loan
| Point | LIC policy loan | Surrendering the policy | Personal loan |
|---|---|---|---|
| Amount | Up to 90% of surrender value | 100% of surrender value | Based on income and credit score |
| Cost | LIC’s loan rate, charged half-yearly | Loss of future bonuses and cover; early surrender recovers less than you paid | Often higher, depending on the lender and your profile |
| Credit check | None | None | Yes |
| Repayment | Flexible, no EMIs | Nothing to repay | Fixed EMIs |
| Life cover | Continues | Ends | Not affected |
| Bonuses | Keep accruing | Stop | Not affected |
| Main risk | Unpaid loan reduces maturity; foreclosure | Permanent loss of the policy | Missed EMIs hurt your credit score |
For a short-term need, a policy loan usually beats surrendering, because you keep the cover and the bonuses. Read our guide to LIC surrender value rules if you are weighing a full exit.
Beware of fake loan apps and calls
Fraudsters often pose as LIC staff, agents or “loan officers”, offering an instant loan on your policy for a “processing fee”. Stay safe:
- LIC does not ask for fees to be paid to personal accounts or UPI IDs to release a policy loan.
- Never share your portal password, OTP, UPI PIN or card details with anyone, including someone claiming to be from LIC.
- Apply only through the official LIC website, the official app, or your servicing branch. Ignore links in SMS or WhatsApp messages.
- If a call feels wrong, hang up and call LIC’s official customer care number from its website.
Key takeaways
- Only traditional savings plans with a surrender value give a loan. Term plans and ULIPs do not.
- You can borrow up to 90% of the surrender value (80% if paid-up), usually from the second or third policy year.
- Interest is charged half-yearly. Confirm the rate in your loan quotation.
- There are no EMIs, but unpaid interest compounds and is deducted from maturity or the death claim.
- Pay at least the interest, and apply only through official LIC channels.
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Frequently asked questions
How much loan can I get on my LIC policy?
Usually up to 90% of the surrender value if the policy is in force and premiums are up to date, and up to 80% if it has become paid-up. A few plans set a lower limit. The exact figure is in the loan quotation LIC shows on the customer portal or gives at the branch.
What is the LIC policy loan interest rate?
LIC sets the rate itself and it differs by plan. Many older traditional policies have been charged around 9% to 10% a year, and newer plans use a formula, for example linked to the 10-year government bond yield. Interest is charged half-yearly. Check the rate in your own loan quotation before you apply.
After how many years can I take a loan on an LIC policy?
Once the policy has a surrender value. For most plans sold between 2014 and 2024 that means two full years of premium. Older plans often needed three years. Plans launched from October 2024 follow newer rules, and some allow a loan after one full year.
Can I take a loan on an LIC term plan?
No. Pure term plans such as Tech Term or Jeevan Amar have no surrender value, so there is nothing to borrow against. ULIPs also do not offer a policy loan. The facility is meant for traditional savings plans.
Do I have to repay the LIC loan in EMIs?
No. There are no EMIs. You pay interest every six months and can repay the principal whenever you like, in full or in parts. If you never repay, LIC deducts the loan and unpaid interest from the maturity or death claim.
Can LIC cancel my policy if I don't pay loan interest?
Yes, in one situation. If the outstanding loan plus unpaid interest grows beyond the surrender value, LIC can foreclose the policy after giving notice. It then adjusts the loan against the surrender value and the policy ends, along with its life cover.
Is LIC loan interest tax-deductible?
Generally no, if you use the money for personal needs. Interest may be deductible only when the loan is used for a purpose the tax law recognises, such as business or buying a house, and the rules for that are specific. Ask a tax adviser before claiming it.
Disclaimer: LIC Premium Calculators is an independent website. We are not affiliated with, endorsed by or connected to Life Insurance Corporation of India. All figures are estimates for illustration; confirm exact premiums and benefits with LIC or a licensed agent before buying.