When money is needed in an emergency, people think of a credit card or personal loan. Short term loan can be taken from a credit card, but personal loan is considered better for long term.
However, the interest rates of personal loan 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 as per 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 loan. LIC provides loan facility on all its policies. If you have an LIC policy and 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 3 to 5 days.
No processing fees or hidden charges
One advantage 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 saving on 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 against LIC policy, its repayment is quite easy. 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 one thing to keep in mind is that 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. First way – Repay the entire principal amount along with interest. Second way – Settle the principal amount along with the claim amount at the time of maturity of the insurance policy. In this case, now you will have to pay only the interest amount. Third way – Pay the interest amount annually and repay the principal amount in a different way.
How much loan can I get?
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 loans available on LIC are secured loans
The loan received against the policy is a secured loan. While giving it, the insurance company keeps your policy as collateral. If you do not repay the loan 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 you repay the loan, then the insurance company can deduct the loan amount from your amount.
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