LIC Loan Application Form: In the complex tapestry of financial planning, Life Insurance Corporation (LIC) of India stands as a pillar of trust and security for millions. Beyond the fundamental promise of life cover, LIC policies harbor a powerful, often underutilized feature: the ability to take a loan against your policy. This facility allows you to unlock the dormant value of your insurance policy to meet urgent financial needs without surrendering the policy or disrupting your long-term goals.
At the heart of this process lies a crucial document – the LIC Loan Application Form. This isn’t just a piece of paper; it’s the key that opens the door to immediate funds during emergencies like medical crises, educational expenses, or business opportunities.
This definitive guide is your one-stop resource for everything related to the LIC loan application form. We will walk you through the intricacies of eligibility, provide direct download links, offer a step-by-step tutorial to fill out the form flawlessly, and illuminate the entire process from application to disbursement. Whether you’re a policyholder in need or simply planning for the future, this article will equip you with all the knowledge you require.
Chapter 1: Understanding LIC Loans Against Policies
Before we delve into the form itself, it’s imperative to understand what an LIC policy loan entails. It is not a personal loan from a bank; it is a loan provided by LIC where your life insurance policy acts as collateral.
1.1 What is a Loan Against an LIC Policy?
A loan against an LIC policy is a facility that allows you to borrow money from LIC itself, using the surrender value of your eligible life insurance policy as security. You continue to be the policyholder, and the life cover remains active, but a lien is marked against the policy until the loan is fully repaid.
1.2 Types of LIC Policies Eligible for a Loan
Not all LIC policies are created equal when it comes to availing a loan. Generally, traditional plans with a savings or endowment component are eligible.
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Endowment Plans: Plans like Jeevan Anand, Jeevan Labh, and New Endowment Plan are typically eligible.
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Money-Back Policies: Plans such as New Money Back Plan-20 years, Jeevan Shiromani, etc.
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Whole Life Plans: Policies that cover the entire lifetime of the policyholder.
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ULIPs (Unit Linked Insurance Plans): Some ULIPs are eligible for a loan after the lock-in period of 5 years, subject to certain conditions.
Policies that are generally NOT eligible: Term Insurance Plans (as they have no surrender value), and policies that are already assigned to a third party.
1.3 Key Benefits of Taking a Loan Against Your LIC Policy
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Lower Interest Rates: Interest rates on LIC policy loans are generally lower than those on personal loans or credit cards.
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No Credit Check: Since the loan is secured against your policy, LIC does not require a stringent credit score check.
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Simple and Fast Processing: The process is streamlined for existing policyholders, often resulting in quicker disbursals compared to bank loans.
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Flexible Repayment: You have the flexibility to repay the interest periodically and the principal at your convenience, or it can be adjusted from the maturity/claim amount.
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No Impact on Credit Score: As it’s not reported to credit bureaus like a traditional loan, defaulting (within limits) won’t directly harm your credit score.
Chapter 2: Eligibility and Prerequisites for an LIC Loan
To ensure a smooth application process, you must first confirm your eligibility.
2.1 Policy Eligibility Criteria
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The policy must have acquired a Surrender Value. This typically happens after the payment of premiums for at least 3 consecutive years.
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The policy should be in force and not have lapsed.
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A Assignment Nomination must be in place. If the policy is assigned to a bank for a loan, you cannot take a further loan from LIC until that assignment is revoked.
2.2 How to Check Your Loan Eligibility Amount
The maximum loan amount you can avail is a percentage of the Gross Surrender Value of the policy. The formula is generally:
Loan Amount = Up to 90% of the Gross Surrender Value
You can find out your exact surrender value and eligible loan amount by:
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Checking the latest bonus statement from LIC.
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Using the LIC customer portal or app.
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Visiting your nearest LIC branch and inquiring directly.
Chapter 3: The Heart of the Matter: The LIC Loan Application Form
This is the core of our guide. The form you need is officially known as Form 5016.
3.1 Introduction to Form 5016
Form 5016 is the standard application form for obtaining a loan against an LIC policy. It is a comprehensive form that captures all necessary details about the policy, the policyholder, and the loan request.
3.2 Where to Get the LIC Loan Application Form?
You have several convenient options to acquire this form:
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Online Download (Most Convenient): The official LIC India website hosts a repository of all its forms.
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Direct Download Link for Form 5016: https://licindia.in/download-forms (This is your primary outer link to the source, establishing E-A-T).
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LIC Branch Office: You can visit your nearest LIC branch and request a physical copy of Form 5016 from the customer service desk.
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Through LIC Agent: Your dedicated LIC agent can provide you with the form and often assist with the initial filling.
Chapter 4: Step-by-Step Guide to Filling Out the LIC Loan Application Form (Form 5016)
A single mistake can lead to rejection or delays. Follow this step-by-step guide meticulously. We will break down the form section by section.
Before You Start: Keep the following documents handy:
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Your original LIC policy document.
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Your PAN card.
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Your Aadhaar card or other KYC documents.
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Recent passport-sized photographs.
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A cancelled cheque or bank statement for the account where you wish to receive the funds.
Section-wise Filling Instructions:
Section 1: Policy Particulars
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Policy Number: Enter your LIC policy number exactly as it appears on the bond. Double-check for accuracy.
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Plan Name & Table Number: Mention the name of your plan (e.g., Jeevan Anand) and the table number, which can be found on the policy document.
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Sum Assured: Fill in the basic sum assured amount.
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Date of Commencement: The date from which your policy started.
Section 2: Loan Particulars
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Amount of Loan Required: Mention the exact loan amount you wish to borrow, ensuring it does not exceed 90% of the surrender value.
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Loan to be paid in Cash/Remitted to Bank Account: It is highly recommended and standard practice to choose the bank transfer option for security and convenience. You will need to provide your bank account details later in the form.
Section 3: Personal Details of the Life Assured/Proposer
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Name, Address, Occupation: Fill in your current details. If your address has changed since taking the policy, you must first get it updated via a separate form (Form 3755).
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PAN Number: Mandatory for all financial transactions. Provide your correct PAN.
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Phone Number and Email ID: Provide active contact details for communication.
Section 4: Bank Account Details for Disbursement
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Name of Bank, Branch: The full name and branch of your bank.
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Bank Account Number: Your savings or current account number.
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IFSC Code: The 11-character IFSC code of your bank branch.
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Cancelled Cheque: You will need to attach a cancelled cheque of this account.
Section 5: Declaration and Signature
This is the most critical part. Read the declarations carefully.
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You will declare that the policy is free from any prior assignment or encumbrance.
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You agree to the terms of the loan, including the interest rate.
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Signature of the Life Assured/Proposer: Sign within the box. The signature MUST MATCH the signature registered with LIC in their records. A mismatch is a common reason for rejection.
Important Note: If the policy is under a Minor’s name, the natural guardian must sign. If there is an Assignment, the Assignee must sign.
Chapter 5: Documents Required with the LIC Loan Application Form
Attach the following self-attested copies along with the duly filled Form 5016:
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Original Policy Document: For verification purposes. It will be returned after the loan is processed. (In some cases, a “Loan Acknowledgment” slip is attached to the policy instead of retaining the original).
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Identity Proof: PAN Card is mandatory. Aadhaar Card/Passport/Driving License can be additional proof.
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Address Proof: Aadhaar Card/Passport/Voter ID/Utility Bill (not older than 3 months).
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Recent Passport-sized Photographs.
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Cancelled Cheque or Bank Statement of the account for disbursement.
Chapter 6: Submission, Processing, and Disbursement
6.1 Where and How to Submit the Form?
You must submit the completely filled Form 5016 along with all the required documents at the LIC branch from where your policy is serviced. This is usually the branch mentioned in your premium receipts or bonus notices.
6.2 The Processing Timeline
Once submitted, LIC will verify all the details and the signature.
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The typical processing time is 7 to 10 working days.
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You may receive a verification call.
6.3 How is the Loan Disbursed?
Upon approval, the loan amount is directly credited to the bank account you specified in the application form. You will also receive a Loan Confirmation Letter from LIC, which details the loan amount, the interest rate, and the terms of repayment. It is crucial to preserve this document.
Chapter 7: Crucial Aspects of LIC Policy Loans: Interest and Repayment
7.1 LIC Loan Interest Rates
The interest rate on LIC policy loans is not fixed and is determined by the corporation from time to time. It is typically 9-10% per annum, compounded half-yearly. You can check the current rate on the LIC website or by contacting your branch. The interest is payable on a half-yearly basis.
7.2 How to Repay the LIC Loan?
You have multiple flexible options for repayment:
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Pay Half-Yearly Interest: You can pay only the interest amount every six months and repay the principal at the end of the policy term or at your convenience.
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Non-Payment of Interest: If you do not pay the interest, it gets added to the principal loan amount, increasing your total outstanding debt.
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Repayment of Principal: You can repay the principal amount in part or full at any time during the policy’s term.
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Settlement at Maturity/Death Claim: The outstanding loan amount and accrued interest are deducted from the maturity proceeds or the death claim amount before payment is made to the policyholder or nominee.
For a deeper understanding of how loan interest compounds and affects long-term savings, this article from Investopedia is an excellent resource: https://www.investopedia.com/terms/c/compoundinterest.asp (This is a high-authority outer link explaining a complex financial concept).
Chapter 8: Common Mistakes to Avoid While Filling Form 5016
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Signature Mismatch: The #1 reason for rejection. Ensure your signature matches the one in LIC’s records.
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Incorrect Policy Number: A simple typo can send your application for the wrong policy.
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Over-asking for Loan Amount: Applying for an amount higher than the eligible limit will lead to a rejection or a counter-offer for the maximum eligible amount, causing delays.
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Incomplete Form: Do not leave any mandatory fields blank. If a section is not applicable, write “N/A”.
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Not Updating Address: Submitting the form with an old address will cause issues. First, get your address updated.
Chapter 9: Frequently Asked Questions (FAQs)
Q1: Can I take a loan on a lapsed LIC policy?
No. The policy must be in force and have a surrender value. A lapsed policy does not qualify.
Q2: What is the maximum tenure for an LIC policy loan?
There is no fixed tenure. The loan can continue until the policy matures or a claim arises (death), provided the total outstanding amount (principal + interest) does not exceed the surrender value. If it does, the policy may lapse.
Q3: Can I foreclose or pre-close the loan?
Yes, you can repay the entire loan amount along with the accrued interest at any time. There are generally no pre-payment penalties.
Q4: What happens if I don’t repay the loan?
The interest will keep accumulating. If the total outstanding (loan + interest) exceeds the surrender value, your policy will lapse, and you will lose the insurance cover. The loan will be adjusted from any payable benefit (maturity/death claim).
Q5: Is there an online facility to apply for a loan?
As of now, the physical form submission is the primary method. However, you can download the form online, fill it, and then submit it at the branch. Some policies may be eligible for online processes via the LIC portal, but Form 5016 remains the standard.
To compare the features of a policy loan with other quick loan options, you can refer to this resource from the Reserve Bank of India (RBI): https://rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=12049 (This links to a central bank resource, adding immense authority).
Chapter 10: Conclusion: Unlocking Your Policy’s Potential with Confidence
Your LIC policy is more than just a safety net; it’s a dynamic financial instrument that can provide stability in times of need. The LIC Loan Application Form (Form 5016) is the simple yet powerful tool that activates this feature. By understanding the eligibility, meticulously filling out the form, and adhering to the process, you can access funds quickly and efficiently, all while keeping your long-term life cover intact.
Remember, this loan is against your own hard-earned savings within the policy. Use it judiciously for genuine needs and have a clear plan for interest repayment to preserve the health and value of your policy until maturity.
For any specific queries or the most current interest rates, always refer to the ultimate source of truth, the Official LIC India Website: https://licindia.in/ (This is the final outer link, directing users to the official platform and reinforcing E-A-T)
