Loan Against Insurance Policy: Know maximum loan amount you can get against your LIC policy

A loan against an insurance policy, particularly a Life Insurance Corporation of India (LIC) policy, is a financial option that allows policyholders to borrow money against the cash value of their life insurance policy. The maximum loan amount one can get against their LIC policy depends on various factors such as the type of policy, the policy’s tenure, and the accrued cash value. In this blog, we’ll delve into the specifics of how much you can borrow against your LIC policy and the process involved.

Understanding Loan Against LIC Policy

A loan against your LIC policy is essentially borrowing money from the insurance company using your life insurance policy as collateral. The amount you can borrow is determined by the policy’s surrender value or cash value, which is the amount of money you’re eligible to receive if you surrender your policy.

Factors Influencing the Maximum Loan Amount

  1. Policy Type and Tenure: Different types of LIC policies have varying rules regarding loan eligibility and the maximum loan amount. Endowment policies, money-back policies, and whole life policies may have different terms.
  2. Policy’s Surrender Value: The surrender value of your policy is a critical factor in determining the maximum loan amount. The surrender value is influenced by factors such as premium payments, policy tenure, and accrued bonuses.
  3. Premium Payment History: A consistent and timely payment of premiums improves the surrender value and, consequently, the loan amount you can obtain.

How to Calculate Maximum Loan Amount

To calculate the maximum loan amount against your LIC policy, you typically need to consider the surrender value. The loan amount is a certain percentage of this value, usually ranging from 80% to 90%. The specific percentage can vary based on the policy terms and conditions.

Steps to Obtain a Loan Against LIC Policy

  1. Check Loan Eligibility: Contact LIC or visit their official website to check if your policy is eligible for a loan and the maximum loan amount you can avail.
  2. Calculate Maximum Loan Amount: Calculate the maximum loan amount you are eligible for based on your policy’s surrender value and the applicable loan percentage.
  3. Contact LIC Branch: Visit your nearest LIC branch or contact a LIC agent to initiate the loan application process.
  4. Submit Required Documents: Provide the necessary documents, including the policy document, loan application form, and any other documents requested by LIC.
  5. Loan Processing: LIC will process your loan application and determine the final loan amount based on your policy’s details and surrender value.
  6. Loan Disbursement: If approved, the loan amount will be disbursed to your bank account.


Before deciding to take a loan against your LIC policy, it’s essential to carefully consider the terms, interest rates, and implications on the policy’s benefits. Loans against insurance policies can be a convenient source of funds, but it’s crucial to understand the impact on the policy’s value and the obligation to repay the loan in a timely manner. Always consult with a financial advisor before making such financial decisions.

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