{"id":695,"date":"2026-08-13T10:00:00","date_gmt":"2026-08-13T04:30:00","guid":{"rendered":"https:\/\/www.taptaploans.in\/blog\/?p=695"},"modified":"2026-10-12T14:06:27","modified_gmt":"2026-10-12T08:36:27","slug":"loan-against-insurance-policy-india","status":"publish","type":"post","link":"https:\/\/www.taptaploans.in\/blog\/loan-against-insurance-policy-india\/","title":{"rendered":"Loan Against LIC &amp; Insurance Policies in India 2026: Loan Value, Rate &amp; Step-by-Step Process"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Indian households quietly hold lakhs of crores in traditional life insurance policies, endowment plans, money-back policies, and whole life. Most policyholders don&#8217;t realise these policies have a parallel use: collateral for low-cost loans. A loan against an LIC policy, postal life insurance, or a private insurer&#8217;s traditional plan typically costs 9\u201311%, substantially below <a href=\"https:\/\/www.taptaploans.in\/blog\/what-is-a-personal-loan\/\">personal loans<\/a>, and uses an asset you already own.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This guide walks through which policies qualify, how much you can borrow, what each insurer charges, and the decision between borrowing against the policy versus surrendering it for cash. By the end, you will know whether your policy is loan-eligible and the exact steps to convert it into liquidity.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Which Policies Qualify<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Not every insurance policy can be used as collateral. The fundamental rule: the policy must have a surrender value (i.e., accumulated cash value the insurer would pay if you cancelled it). This usually means:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th><strong>Policy Type<\/strong><\/th><th><strong>Loan Eligible?<\/strong><\/th><th><strong>Why<\/strong><\/th><\/tr><\/thead><tbody><tr><td>Endowment plans (LIC Jeevan Anand, Jeevan Labh)<\/td><td>Yes<\/td><td>Have surrender value after 2\u20133 years<\/td><\/tr><tr><td>Money-back policies<\/td><td>Yes<\/td><td>Have surrender value<\/td><\/tr><tr><td>Whole life policies<\/td><td>Yes<\/td><td>Have surrender value<\/td><\/tr><tr><td>Term insurance (pure protection)<\/td><td>No<\/td><td>No surrender value<\/td><\/tr><tr><td>ULIP (Unit Linked)<\/td><td>Limited<\/td><td>Some insurers allow after lock-in<\/td><\/tr><tr><td>Pension\/Annuity plans<\/td><td>Sometimes<\/td><td>Depends on plan stage and insurer<\/td><\/tr><tr><td>Postal Life Insurance (PLI\/RPLI)<\/td><td>Yes<\/td><td>After 3 years of premium payment<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">If you hold a term insurance policy, you cannot borrow against it; there&#8217;s nothing to surrender. Endowment and money-back are the most common <strong><a href=\"https:\/\/www.taptaploans.in\/blog\/check-personal-loan-eligibility-without-cibil-impact\/\">loan-eligible products<\/a><\/strong> in Indian households.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How Much Can You Borrow<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The loan amount is based on the policy&#8217;s surrender value, not its sum assured:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th><strong>Insurer<\/strong><\/th><th><strong>Max Loan (% of Surrender Value)<\/strong><\/th><th><strong>Interest Rate (2026)<\/strong><\/th><\/tr><\/thead><tbody><tr><td>LIC of India<\/td><td>Up to 90%<\/td><td>9\u201310.5%<\/td><\/tr><tr><td>Postal Life Insurance<\/td><td>Up to 90%<\/td><td>10\u201310.5%<\/td><\/tr><tr><td>HDFC Life<\/td><td>Up to 80%<\/td><td>10.5\u201312%<\/td><\/tr><tr><td>ICICI Prudential Life<\/td><td>Up to 80%<\/td><td>11\u201312.5%<\/td><\/tr><tr><td>SBI Life<\/td><td>Up to 85%<\/td><td>10\u201311.5%<\/td><\/tr><tr><td>Max Life<\/td><td>Up to 80%<\/td><td>11\u201312.5%<\/td><\/tr><tr><td>Bajaj Allianz Life<\/td><td>Up to 80%<\/td><td>11\u201313%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Example:&nbsp;<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>LIC endowment policy: sum assured \u20b910L, premium paid for 7 years.<\/li>\n\n\n\n<li>Current surrender value: approximately \u20b92.5L.<\/li>\n\n\n\n<li>Maximum loan from LIC at 90% LTV: \u20b92.25L.<\/li>\n\n\n\n<li>Interest rate: 9.5\u201310.5%.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>LIC Policy Loan: Rate and Process<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">LIC offers the most-used policy loan product in India. Key features:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Interest rate: 9\u201310.5% (subject to periodic revision).<\/li>\n\n\n\n<li>Interest payable half-yearly (1 January and 1 July).<\/li>\n\n\n\n<li>Loan amount: up to 90% of surrender value (or 85% on premium-paying policies).<\/li>\n\n\n\n<li>Minimum tenure of policy: 3 years (full premiums paid).<\/li>\n\n\n\n<li>Process: online through the LIC customer portal, or offline at any LIC branch.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Documents required:&nbsp;<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Original policy document.<\/li>\n\n\n\n<li class=\"has-text-dark-color has-text-color has-link-color wp-elements-1\"><a href=\"https:\/\/www.taptaploans.in\/blog\/personal-loan-application-rejected\/\">Loan application form<\/a> (LIC Form 5196).<\/li>\n\n\n\n<li>KYC (PAN, Aadhaar).<\/li>\n\n\n\n<li>Cancelled cheque for disbursal.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Processing time: 3\u20137 working days. Disbursal directly to your bank account.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Postal Life Insurance Loan<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">If you hold a postal life insurance policy (PLI) or rural postal life insurance (RPLI):<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Loan available after 3 years of policy.<\/li>\n\n\n\n<li>Loan amount up to 90% of surrender value (after 5 years).<\/li>\n\n\n\n<li>Loan amount up to 50% of surrender value (between 3 and 5 years).<\/li>\n\n\n\n<li>Interest rate: approximately 10%.<\/li>\n\n\n\n<li>Process: through the post office where the policy was issued.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Private Insurer Loans<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">HDFC Life, ICICI Prudential, SBI Life, Max Life, Bajaj Allianz, and others offer policy loans on traditional plans. The structure is similar to LIC but:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>LTV cap is usually 80% instead of 90%.<\/li>\n\n\n\n<li>Rates are slightly higher (10.5\u201313%).<\/li>\n\n\n\n<li>Process is often faster (24\u201348 hours digitally).<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Loan vs Surrender: When Each Makes Sense<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Take a loan against the policy when:&nbsp;<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You need money short-term (under 5 years).<\/li>\n\n\n\n<li>Your policy is on track to deliver good maturity benefits.<\/li>\n\n\n\n<li>You can comfortably pay loan interest while continuing premiums.<\/li>\n\n\n\n<li>You don&#8217;t want to lose the life cover.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Surrender the policy when:&nbsp;<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The policy is fundamentally a bad investment (low ROI, expensive premiums).<\/li>\n\n\n\n<li>You can replace the life cover with cheaper term insurance.<\/li>\n\n\n\n<li>You don&#8217;t need the maturity benefit and want full liquidity.<\/li>\n\n\n\n<li>Loan interest would exceed the policy&#8217;s bonus\/loyalty addition.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Most <a href=\"https:\/\/www.taptaploans.in\/about\">financial advisors<\/a> recommend keeping good policies and borrowing against them, since the policy&#8217;s bonus often exceeds the loan interest cost over time.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Step-by-Step: How to Apply for LIC Policy Loan<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"has-text-dark-color has-text-color has-link-color wp-elements-2\">1. Log in to LIC Customer Portal<strong> (<a href=\"https:\/\/licindia.in\">licindia.in<\/a>)<\/strong>.<\/li>\n\n\n\n<li>2. Navigate to Online Services &gt; Loan &gt; Online Loan Request.<\/li>\n\n\n\n<li>3. Select the policy you want to borrow against.<\/li>\n\n\n\n<li>4. The portal displays the maximum loan available.<\/li>\n\n\n\n<li>5. Choose a loan amount within the cap.<\/li>\n\n\n\n<li>6. Submit athe pplication; loan disbursed to your registered bank account in 3\u20137 working days.<\/li>\n\n\n\n<li>7. Interest is auto-deducted half-yearly.<\/li>\n\n\n\n<li>8. Repay principal anytime (no prepayment penalty).<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Repayment Rules and Default Consequences<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A loan against a policy is more lenient than other loans:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"has-text-dark-color has-text-color has-link-color wp-elements-3\">No fixed <a href=\"https:\/\/www.taptaploans.in\/blog\/emi-too-high-what-to-do-india\/\">EMI schedule<\/a>; only interest payable periodically.<\/li>\n\n\n\n<li>The principal can be repaid anytime in full or in parts.<\/li>\n\n\n\n<li class=\"has-text-dark-color has-text-color has-link-color wp-elements-4\">No <a href=\"https:\/\/www.taptaploans.in\/blog\/blog-personal-loan-hidden-charges-india\/\">prepayment penalty.<\/a><\/li>\n\n\n\n<li>If unpaid at maturity, the loan + interest is deducted from the maturity benefit.<\/li>\n\n\n\n<li>In case of death during the loan period, the loan + interest is deducted from the death benefit paid to the nominee.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">This is the most borrower-friendly loan structure available in India. The trade-off is that interest accrues even if you don&#8217;t pay, and total dues at maturity\/death can balloon.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Frequently Asked Questions<\/strong><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1781497911051\"><strong class=\"schema-faq-question\"><strong>How long does a loan against an LIC policy take?<\/strong><\/strong> <p class=\"schema-faq-answer\">3\u20137 working days online; longer offline. Some private insurers process in 24\u201348 hours.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1781497923209\"><strong class=\"schema-faq-question\"><strong>Can I take a loan on a paid-up policy?<\/strong><\/strong> <p class=\"schema-faq-answer\">Yes, if it has surrender value. Paid-up policies (where you stopped paying premiums but the policy continues at reduced cover) usually qualify.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1781497934847\"><strong class=\"schema-faq-question\"><strong>Will my policy lapse if I take a loan?<\/strong><\/strong> <p class=\"schema-faq-answer\">No. The policy stays active as long as you continue paying premiums. A loan is a parallel obligation.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1781497943984\"><strong class=\"schema-faq-question\"><strong>What if the surrender value is less than the loan amount sought?<\/strong><\/strong> <p class=\"schema-faq-answer\">You cannot borrow more than the LTV cap on the current surrender value. As you continue paying premiums, surrender value grows, and you can borrow more.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1781497955193\"><strong class=\"schema-faq-question\"><strong>Is the loan amount tax-deductible?<\/strong><\/strong> <p class=\"schema-faq-answer\">Interest on a policy loan is generally not deductible unless the loan is used for business purposes (then Section 36 may apply).<\/p> <\/div> <\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion <\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">If you hold a traditional life insurance policy, it is an underused source of low-cost liquidity. Rates of 9\u201312% beat personal loans; the policy continues to provide cover, and the borrower-friendly repayment structure makes it ideal for medium-term cash needs.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Compare a loan against policy vs personal loan vs LAF with<\/em> <em><strong><a href=\"https:\/\/www.taptaploans.in\/salaried\">TapTap Loans before deciding which suits your situation.<\/a><\/strong><\/em><\/p>\n\n\n<div class=\"yoast-breadcrumbs\"><span><span><a href=\"https:\/\/www.taptaploans.in\/blog\/\">Home<\/a><\/span> \u00bb <span class=\"breadcrumb_last\" aria-current=\"page\">Loan Against LIC Policy<\/span><\/span><\/div>","protected":false},"excerpt":{"rendered":"<p>Indian households quietly hold lakhs of crores in traditional life insurance policies, endowment plans, money-back policies, and whole life. Most policyholders don&#8217;t realise these policies have a parallel use: collateral for low-cost loans. A loan against an LIC policy, postal life insurance, or a private insurer&#8217;s traditional plan typically costs 9\u201311%, substantially below personal loans,&hellip;<\/p>\n","protected":false},"author":7,"featured_media":1605,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[222],"tags":[323,320,324,21,76],"class_list":["post-695","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan-guides-financial-wellness","tag-lic-policy-loan","tag-life-insurance","tag-loan-against-insurance","tag-loan-interest-rates-india","tag-loan-refinancing"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Loan Against LIC Policy: Eligibility, Rates &amp; Process<\/title>\n<meta name=\"description\" content=\"Learn how a loan against an LIC policy works, including eligibility, loan amount, interest rates, application steps, and repayment.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.taptaploans.in\/blog\/loan-against-insurance-policy-india\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Loan Against LIC Policy: Eligibility, Rates &amp; Process\" \/>\n<meta property=\"og:description\" content=\"Learn how a loan against an LIC policy works, including eligibility, loan amount, interest rates, application steps, and repayment.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.taptaploans.in\/blog\/loan-against-insurance-policy-india\/\" \/>\n<meta property=\"og:site_name\" content=\"TapTap Loans\" \/>\n<meta property=\"article:published_time\" content=\"2026-08-13T04:30:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-10-12T08:36:27+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.taptaploans.in\/blog\/wp-content\/uploads\/2026\/06\/Loan-Against-LIC-Policy.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1088\" \/>\n\t<meta property=\"og:image:height\" content=\"608\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Mahie Gupta\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@taptaploans\" \/>\n<meta name=\"twitter:site\" content=\"@taptaploans\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Mahie Gupta\" \/>\n\t<meta name=\"twitter:label2\" content=\"Estimated reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.taptaploans.in\\\/blog\\\/loan-against-insurance-policy-india\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.taptaploans.in\\\/blog\\\/loan-against-insurance-policy-india\\\/\"},\"author\":{\"name\":\"Mahie Gupta\",\"@id\":\"https:\\\/\\\/www.taptaploans.in\\\/blog\\\/#\\\/schema\\\/person\\\/14f6e9804084ac848e204ee872c7d948\"},\"headline\":\"Loan Against LIC &amp; 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