Loan Against LIC Life Insurance Policy - Hindi - YouTube

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In this video, we will talk about loans against LIC policy

You can get the loan from any Life insurance policy not just LIC

You can have life insurance from LIC or any other bank or financial institution

Let's assume, you are taking a personal loan & you already have a LIC policy

So you can take a loan against that & this is cheaper than the personal loan

I am not saying you to invest in LIC policy to take a loan or you can get a loan that is why you should invest in LIC policy

As an investment LIC policy or any insurance policies are not good, as they give only 6-7% returns

If you invest in mutual funds, real estate, shares, infrastructure funds, then you can get better results

So, you should not consider insurance as an investment

But if you have already taken any policy, which we call as endowment plan

This loan is not given on term but if you have taken endowment plan from LIC or any other bank/financial institution

Then you can get loan against that

You can consider it rather than a personal loan as interest rates are low

In this video, we will see all the important features of loan against LIC policy

Its advantages & disadvantages, how much interest rate is there

Eligiblity requirments, how much loan you can get?

How to repay this loan, how to pay interest & principle

We will see all this, so, watch the video till the end, let's move to the blackboard

Let's understand, how to take a loan against a Life Insurance policy

You can get a loan from any life insurance policy, whether it is done with LIC or any other bank

Traditional life insurance plans are not a great investment

Traditional plans (endowment plans) are not a good investments as they have low insurance cover

And they give poor returns

If you are getting 6-7% returns in any insurance, then, any mutual funds can give you 12-15% returns

Infrastructure bonds can give you 9-10% returns

So, that is why it is not considered as a good investment, instead, you can take any term plan

And invest remaining money, then you can get more profit

If you have not purchased traditional plans then go for a term plan instead & invest remaining money somewhere else

If you have already purchased a traditional life insurance plan that to leave it in between

Might not be a good decision as its surrender value is low

And if you end the policy befor time than you will get less money

You can get a decent returns if you wait till maturity

If you have already purchased a traditional life insurance plan, then you can avail loan against your policy

If you have any urgent requirment then you can get loan on your policy, we will take about this in this video

Loan are not available on term plans as they are pure insurance & they don't give any returns

So, all the money you are investing is going for insurance & you will not get any returns

So, you can buy this insurance & invest remaining money to get better retuns

Insurance should always be seen as an insurance & not as an investment

Loans are not available on ULIPs (Unit Linked Insurance Plans)

In this, the insurance company invest the money in the share market

As the share market gives better returns, that is why, returns of ULIPs are better

So, loans are not available on term plans & ULIPs

Purpose for loan

Any personal purpose like marrige, education, home improvement, medical emergency, etc.

Then you can take loan against your LIC policy

In this video, when I say LIC policy that means I am talking about the life insurance policy of any bank

You can get loan for persnal use but it is not allowed for trading & speculation

Tenure = min. 6 months

Let's say, if you pay the loan in 3-4 months, then too you have to pay the interest of 6 months

Max. Tenure = remaining policy term

As soon as your policy is over, your loan will also get over, we will also talk about how loan repayment is done?

Interest rate = 1.5-3% more than home loan interest

Let's say, if you home loan interest is 8.5%, then the loan you will get against your LIC policy will have an interest of 10-11%

It can vary but generally, it is 1.5-3% more than ho,e loan interest

But it is less than personal loan as personal loan is 5-6% more than home loan interest

So, home against LIC policy is cheaper than personal loan

Eligiblity

90% of surrender value (LIC), when your policy & loan both are taken from LIC

But it is 85% if you take loan from any bank instead of LIC

How surrender value is calculated?

Loan available only after 3 years of policy, when you have paid at least 3 annual premiums

Applicant should be a resident Indian & 18+ years in age

So, these are eligiblity requirments

How loan repayment is done?

Whenever you take a loan, then only interest is to be paid regularly every 6 months

Principle amount can be paid any time

You can pay it with interest, which means you can pay principle amount, when you pay interest every 6 month

Or you can pay it anytime during policy term

Let's say, you have take a loan of 5 lakhs

Let's say, You pay 1 lakh in 1st year, 1.5 lakh in 2nd year

Then let's say, you don't have money for 2 years, so you pay 2 lakh in 5th year

So, you can pay it anytime you have money

So there are no restrictions on this, only you have to pay interest every 6 months

But if you have not paid any principle amount in the policy term, then you maturity amount

When your policy will mature, let's say if the policy period was 20 years & you were getting 50 lakhs after maturity

Let's say you take a loan of 20 lakh which you do not repay

You will get 30 lakh on maturity time with a deduction of 20 lakh

So your principal is adjusted to the maturity amount

If you want your full maturity amount at the end of the term

Then you pay the principal amount as you have a money

If you pay the principal amount, then your interest also come down

As interest is charged on the principal amount

As you have the money, you should repay your loans

This loan basically is a secured loan

Your policy is assigned as security for this loan, If your loan

If you do not pay the interest on time

Then your policy may lapse

You will not get any money from it in that case

So, you should try to do your payment on time

At least your interest payments should be on time

Let us talk about, how the surrender value and loan amount is calculated, we take an example of new Jeevan Anand policy

Let your sum assured is 25 lakhs

And the term of a policy is 20 years

Let's say you have to pay the premium of up to 20 years, in some policies, you can pay at one time

We suppose you pay the premium annually, but you also have the option of quarterly & monthly payment

Your first-year premium amount will come to Rs1,44,433 in this

Your premium onward 2nd year is RS.1,41,313

Your maturity amount after 20 years will be Rs.51,75,000

The maturity amount is calculated on the interest promised by the LIC

Now we see, how the surrender value of it calculate

For the first two years, you get a 0 surrender value

You cannot take a loan on it in the first two years or nor can terminate the policy

You can terminate the policy only after paying three annual premium

So, there is a minimum period of 3 years, only after 3 years you can surrender your policy or take a loan on it

After three years you paid a premium of around Rs.4,27,049

So, surrender value is less than of premium, and you can get a loan of up to 90% of its value

You get a loan of Rs.1,66,685 only

As your time period increases your surrender value also increase

And you can apply for more loan amount

Suppose, you want a loan after 10 years

Let's say in 10 years you have paid a premium of 14,16,239

Your surrender value will be Rs.100000

You will get a loan amount of up to 9,19,497

If your LIC policy is too old, on that you can get a loan of more amount

So this way your surrender value & loan amount is calculated

App also come for the calculation of surrender value

I make a new video about the app

I took this figure from that app

We will see in the next video how you can calculate the premium & surrender value by himself

Let's take a quick look at what document you need to take a loan of policy

Application form, passport-size photo, copy of latest income tax returns, Id & address proof

Your income documents are required, in income doc. 3 months latest salary slip

Form-16 of two years and bank statement of 6 months

Bank statement of account in which your salary is reflect

Generally, these are common documents in all types of loans

You can keep ready documents before applying for the loan

What are the benefits and limitations of these loans

First talk about the benefits

Disbursal is very fast in these loans, your loan approval is swift

And documentation is minimum as be see only some common document is required for these loans

Aside from the documents you only have to assign the policy, the policy is pledged as a security

A deed is signed for the assignment of the policy

And your credit score is not checked here, if your credit score is low then also you can get a loan on these easily

Second, it is cheaper than the personal loan

If you get a personal loan at an interest of 15-16 % then you can get a loan against LIC at only 10-10.5%

So, it is very beneficial as compared to a personal loan

You can consider a loan against LIC in place of a personal loan

There is no processing fee

In mostly loans processing fee lay, If I talk of a personal loan fee, it is somewhere 1-2% of the loan amount

In the loan against LIC policy, no processing fee is charged

Flexibility in loan repayments, since you have to pay interest only every 6 months

You can pay principle anytime when you have the money

Or you can adjust it in maturity amount

So, enough flexibility is in this, let's say you have a cash burden or cannot afford the EMI of a personal loan

Then it is a better alternative for you

Another benefit of it, you can apply for the loan online from the website of a LIC

Or You can apply through any LIC branch

If you want to apply from another you can also do this

But I suggest you, apply through the LIC because the interest rate is low and the loan sum is also large there

We talk about some of its limitations

As we talk earlier interest in this is lower than the personal loans but higher than the home loans

If you considered buying a property

It is better to take a home loan because it is the cheapest among the loans

On today's date, home-loans are available at 8-8.5% very readily

As compared to home loans LIC loans are with the interest of 10-10.5%

So its interest rate is 2-3% higher than the home loans

You should go with the home loans if you consider buying a property

The second limitation is, your loan eligibility is limited to the surrender value

If you need a loan of a large amount, may it is not sufficient for you

As we have seen earlier the surrender value in the initial year is very low as compared to the premium sum

As we talk of 3 years, we paid the premium of around 4.4 lakh and loan value is only 1.6 lakh

In the initial years, your's surrender value is very low

Therefore if your policy becomes old then you get a more loan amount on that

And no tax benefit is given on loan repayment in these loans

Suppose you want to buy a property, then you get the tax benefit on the home-loans

But this tax benefit you do not get on loan against LIC policy

So this is some disadvantage of it

So these are all the benefits and limitations of a loan against LIC policy

And we covered all the important features of this loan

I hope after watching this video you can make a better decision whether you take a loan against the LIC policy or not

I tried to cover all major points, still, if I miss some point or you want to add some point so you can comment below

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