Personal Loan

LIC Personal Loan Interest Rate 2022: All Types


The largest insurance provider in India, Life Insurance Corporation (LIC), gives its customers the option of taking out personal loans against their insurance policies in addition to a variety of insurance products. These LIC policy-backed secured personal loans provide payback terms of up to five years.

The LIC personal loan interest rate starts as low as 9% per year. To cover a variety of personal financial demands, including medical costs, a wedding, further education, etc., you can borrow up to 90% of the policy’s amount of deposit.

Your loan amount is 90% of the policy’s amount of deposit, with a 5-year term and an interest rate that begins at 9% per annum.

Interest Rates for LIC Personal Loans

The LIC personal loan interest rate begins at 9% per year. However, the personal loan’s rate of interest that applies to a certain application changes depending on the applicant’s unique profile. This may include your level of income, kind of work, desired loan amount and term, etc.

Calculation of Interest on LIC Reducing Balance vs. Flat Balance

The flat rate or flat balance method of calculating interest on a personal loan with the LIC Personal Loan Interest Rate is employed. In this case, the interest is calculated on the total loan principal amount for the course of the loan term. It does not take into consideration the principle that has now been paid in full. This plan doesn’t take into account the fact that when monthly EMIs are paid, the amount of the loan principal steadily goes down.

The declining balance technique, however, just calculates interest on the remaining loan principle each month. Consequently, when the amount of the unpaid balance falls each month, so does the interest due. As a result, when interest is calculated using declining balance interest rates, you will save money on the total interest payment of the loan.

How Can I Get a Personal Loan from LIC at Low Interest Rates?

Here are some tips that may help you get a personal loan from LIC with a lower rate of interest:

  • Having solid employment and work history with a reputable company 
  • Timely payment of EMIs and credit card balances 
  • Having a positive history with the lender 
  • Reduce your debt already due.

Interest rate-influencing factors

Here are some critical elements that determine the LIC personal loan interest rate:

Income: The applicant’s income frequently affects the interest rate that the lender charges. Applicants with higher yearly salaries are frequently given personal loans at lower interest rates. This is because they are thought to have a stronger ability to repay the loan. They are also less likely to fail on repayments.

Employment Information: Borrowers who work for reputable companies have steady jobs. They have a history of employment. So they may be given personal loans at reduced interest rates. The applicant’s kind of employment—whether they are salaried or self-employed—often has an impact on the LIC Personal Loan Interest Rate that the lender would charge.

Connection with LIC: Maintaining a positive relationship with LIC by paying your insurance premiums on time, among other things, may enable you to get a personal loan at a cheaper interest rate.

Expected Loan Amount and Loan Term: Typically, higher interest rates and longer loan terms go hand in hand with bigger loan amounts.

How do I apply for a personal loan from LIC?

Online and offline applications are accepted for LIC personal loans. Before that, it’s crucial to confirm whether or not you qualify for a LIC policy loan. To determine your eligibility, follow the procedures below:

  1. Visit the LIC e-service website to log into your LIC account. 
  2. Print and complete Form 5196. 
  3. Send your policy agent Form 5196. 
  4. For further action, the policy agent must follow up with the relevant LIC office.

Final Words

Financial emergencies cannot be used to describe plans to purchase a home or automobile. This is because such decisions need months of planning. Medical expenditures, impromptu wedding preparations, and unexpected educational opportunities are examples of expenses that may qualify as emergencies.

LIC can help you in these kinds of situations by giving you a personal loan.

Visit Piramal Finance ( for more information. It is an Indian financial services company that is making its foray into retail lending. This includes personal loans, business loans, housing loans, and other consumer-focused finance products.


  1. What is the maximum sum that may be used in connection with the LIC policy?

The maximum amount that may be borrowed against a LIC policy is 90% of the surrender value of the policy. For paid-up policies, which are those for which premiums are no longer being paid, the most you can borrow is 85% of the surrender value.

  1. How soon can the loan be paid back?

The loan must be repaid in full within six months. Even if the applicant wants to pay off the loan early, there will be a six-month interest charge.

  1. Is it possible to obtain many loans on one LIC policy?

Yes, as long as LIC’s terms and conditions have been met and the first loan has not yet been paid back.

  1. What happens if the insurance runs out or is used during the time it takes to pay back the loan?

If the insurance runs out or a claim is made during the time the debt is being paid back, the interest amount must be paid until the maturity date.

  1. How will interest be determined if the policyholder passes away?

Interest will be computed up until the policyholder’s death date if they die away.