LIC Loans EMI, interest , Principal Calculation Process

If you are eligible to get the LIC Loan against your policy. Lot of Questions regarding repayment will arise. How much EMI should I Pay.? How much interest rate i need to pay? What is the calculation procedure.? Where should i pay LIC Loan.? All these questions are common for any loan taker.

LIC loan calculation procedure
Due to the heavy work load at LIC office, staff may not expalain everything what is in your mind. So here i am trying to explain something about LIC Loans Repayment.

Points to be remembered in LIC Loan Repayment Calculation

Interest Rate : 9% per annum
Due Months : Two times per annum. Policy Commencement month onwards every six months. For example if your policy commencement is on January, you need to pay Instalments on January, July.
Broken Period Settlement: If you take loan on September. First time you need to pay loan from September to December. This period is called Broken period settlment.
Minimum period to repay: Minimum period you can pay is six months or broken period settlement which ever is early.
Maximum Period to repay: If you didn’t paid until your policy maturity. Your loan amount will be deducted from your policy matured amount.
LIC Loan Principal Repayment(EMI): Actually here there is nothing called EMI. What ever the Principal we want to pay.. we can pay. But It is better to organise your repayment properly.
Tenure: Make it as early as possible. Otherwise you need to pay more interest. If you plan early tenure (six months) you can complete your loan with 4.5% itself.
Interest: 4.5% on outstanding at the time of due month.

Related Tip: Home Loan Money saving Tips when Interest rates increased.

LIC Loan Calculation Procedure example


Please observe the above figure. For Loan Amount Rs.30000 12 Months tenure has been selected. Monthly Rs.2500.00 Principal and Interest (0.75%) on Prinicipal is assumed. You need to pay accumulated amount once in every six months. total interest for 12 months is assumed Rs.2025 i.e. 6.32% on Rs.30000.

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  1. prakash says:

    suppose i am unable to pay interest on time am i charged interest on interest? if so how much is this compound interest?

    1. Vaishali says:

      Prakash, in any repayment system, it is better to pay interest on time which saves further burden.

  2. vishwanath says:

    its really good and useful

  3. Rajesh K Joshi says:

    suppose i am unable to pay interest on time. Can LIC charged interest on interest i.e. compound interest? if so how much is this compound interest what is the rate of interest and calculation?

    1. Vaishali says:

      Yes Rajesh you are right.

  4. yogi says:

    I am Paying Rs 604 as Lic Premium Monthly from 2006 onwards Without Break…….Suppose if i Want to Get Loan from it……..How much shall i Get & Wat is the Procedure for it & Whom Should I CONTACT ??????????

  5. Vinod Kumar Sharma says:

    I am interested to tale loan against Police.What is the procedure.

    1. Vaishali says:

      Hi Vinod Kumar Sharma,
      Goto your policy lic branch with your policy bond. They will guide you.

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