When money is needed in an emergency, people think of a credit card or personal loan. Short-term loans can be taken from a credit card, but a personal loan is considered better for the long term. However, the interest rates of personal loans are very high and the burden of paying EMI every month is on the head. But there is also a loan which is cheaper than a personal loan and there is no load of paying EMI in it. Its repayment system is so easy that you can repay the loan at your convenience. Most people will not be aware of this. Know about this loan here.

Know which loan is this.

We are talking about LIC loans. LIC provides loan facilities on all its policies. If you have an LIC policy and a loan facility is available on it, then you can arrange money by taking that loan in difficult times. This loan does not require much paperwork and the customer can get the loan amount in just a period of 3 to 5 days.

No processing fees or hidden charges
One of the advantages of a loan on LIC is that you do not have to surrender your policy. In this case, you do not lose the benefits of insurance. Apart from this, this loan is cheaper than a personal loan. Also, there are no processing fees or hidden charges while taking it. In this case, there is a saving on the additional costs of the loan. Usually, a loan on LIC is available at an interest rate of 9% to 11%, while the interest on a personal loan can range from 10.30% to 16.99%.

No hassle of EMI every month
If you take a loan on an LIC policy, then its repayment is quite easy. In this, there is a good amount of time to repay the loan because the loan period can be from a minimum of six months to the maturity of the insurance policy. In such a situation, the good thing for the customer is that there is no tension of paying EMI every month on this loan. As the money accumulates, you can pay accordingly. But keep one thing in mind annual interest will keep getting added to it. If a customer settles the loan within the minimum period of 6 months, then he has to pay interest for the entire period of 6 months.

3 options to repay the loan

In this, the loan can be repaid in three ways. The first way - repay the entire principal amount with interest. The second way - settle the principal amount along with the claim amount at the time of maturity of the insurance policy. In such a situation, now you will have to pay only the interest amount. The third way - pay the annual interest amount and repay the principal amount differently.

How much loan can be availed?

The loan amount in LIC is decided according to the surrender value. You can get a loan of up to 80 to 90 percent of the surrender value of the policy.

The loan available on LIC is a secured loan.
The loan available on the policy is a secured loan. While giving it, the insurance company keeps your policy as collateral. If the loan is not repaid or the outstanding loan amount exceeds the surrender value of the policy, the company has the right to terminate your policy. If your insurance policy matures before the loan is repaid, then the insurance company can deduct the loan amount from your account.

How to apply for a loan

You can apply both online and offline to get a loan against the policy. For offline, you will have to go to the LIC office and apply for the loan with KYC documents. To apply online, register for LIC e-services. After this, log in to your account. After this, check whether you are eligible to get a loan to replace the insurance policy or not. If yes, then read the loan terms, conditions, interest rates, etc. carefully. After this, apply and upload the KYC documents online.