So, your LIC policy is gathering dust... and you need some cash?
Life throws curveballs, sometimes leaving you needing a financial knight in shining armor. But what if that knight is actually... your LIC policy? That's right, you might have a hidden source of funds stashed away in the form of a loan against your LIC policy.
Hold on, a loan from my insurance policy? What sorcery is this?
No sorcery involved, my friend. It's a simple concept, but with a few twists and turns, so buckle up!
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| How Does Loan Against Lic Policy Work |
The Lowdown on Loans Against LIC Policies:
1. Not all LIC policies are created equal. You can only avail a loan against policies that have been in force for at least 3 years and have acquired surrender value. Basically, your policy needs to have some cash built up to be considered a worthy loan candidate.
2. How much moolah can I borrow? The amount you can borrow depends on the surrender value of your policy. This is the cash you'd get if you surrendered (cancelled) your policy. LIC usually allows you to borrow up to 90% of this surrender value, but it can vary depending on the specific policy type.
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3. Interest rates: Not your grandma's loan shark. Compared to other loan options, loans against LIC policies generally come with lower interest rates. We're talking in the ballpark of 10-12%, which is significantly lower than a typical personal loan.
4. Repayment? Don't sweat it (too much). You typically have a repayment period of up to 6 years to pay back the loan, with some flexibility depending on the policy. Remember, failing to repay can lead to your policy lapsing, so make sure you factor the loan repayment into your monthly budget.
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5. But wait, there's more! There are a few caveats to consider:
- Death benefit: If you pass away with an outstanding loan, the loan amount will be deducted from the death benefit paid to your beneficiaries.
- Premium payments: Don't forget, you'll still need to continue paying your LIC policy premiums even while you have a loan against it.
So, is a loan against your LIC policy the answer to your financial woes?
It depends! It can be a convenient and affordable option for short-term needs, especially if you have a good credit history and don't want to deal with the hassle of traditional loans. However, it's not a free lunch. Carefully consider the impact on your long-term financial goals and weigh the pros and cons before taking the plunge.
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Remember, responsible borrowing is key! Don't go overboard and end up jeopardizing your future financial security.
And hey, if you're still unsure, consult a financial advisor. They'll help you navigate the complexities of loan against LIC policies and ensure you make an informed decision.
Now, go forth and conquer your financial needs, armed with the knowledge of loan against LIC policies!
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