Borrowing from your LIC policy: Turning your policy into a magic money machine (well, almost)
Life throws curveballs, sometimes leaving you needing a financial cushion softer than a baby panda. That's where your LIC policy comes in, like a superhero swooping in to save the day... with a loan!
But hold on there, Captain Cash-Flow, before you start picturing yourself on a luxurious yacht financed by your policy, let's understand how this loan thingy works.
Step 1: Unearthing the magic number - The Surrender Value
Tip: Reread slowly for better memory.
Think of your LIC policy as a piggy bank. The money you've been diligently putting in over the years has accumulated a value, and that, my friend, is called the Surrender Value. It's basically the amount you'd get if you decided to, well, surrender the policy (but don't do that, we're just borrowing here!).
Here's the catch: You can't borrow the entire Surrender Value. LIC, being the wise and responsible financial guru it is, allows you to borrow only a percentage of it, usually up to 90%. So, if your Surrender Value is ₹1 lakh, you can borrow a maximum of ₹90,000.
Tip: The details are worth a second look.
Step 2: Facing the foe - The Interest Rate
Alright, you've got your borrowing limit. Now, there's a tiny (or not so tiny, depending on the amount) fee attached, called the Interest Rate. This is basically the rent you pay to LIC for borrowing their money.
Tip: Skim only after you’ve read fully once.
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Here's the good news: LIC's interest rates for loans against policies are generally lower than personal loans from banks. So, you're saving some moolah there! But remember, interest rates can vary depending on factors like your policy type, term, and loan amount.
Step 3: The grand finale - Repayment options
Tip: Reread the opening if you feel lost.
Now, this loan isn't free pizza. You gotta pay it back, along with the interest, within a specific timeframe determined by LIC. There are usually two options:
- Pay the interest only: This option allows you to just pay the interest accrued on the loan amount regularly. You can then repay the principal amount at the end of the loan term.
- Equated Monthly Installments (EMIs): This is like paying off your phone in installments. You pay a fixed amount every month that covers both the principal and interest.
Remember: Don't take out a loan that you can't repay comfortably. Missing payments can lead to penalties and, in extreme cases, even policy lapse. So, borrow wisely and use this financial tool responsibly.
Bonus Tip: Don't be shy! Contact your nearest LIC branch or visit their website for more specific details and calculations based on your individual policy. They're there to help you navigate the loan process smoothly.
So, there you have it! Now you're equipped to turn your LIC policy into a temporary financial superhero, helping you through tough times without compromising your long-term financial goals. Just remember, use it wisely, and don't forget to pay back your friendly neighborhood LIC!
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