The Life Insurance Corporation of India (LIC) provides policyholders with a facility to raise money against their life insurance policy. The facility assists people in meeting immediate financial requirements without having to lose their life insurance cover. However, prior to borrowing against insurance, one must ensure to check the terms of borrowing and their ability to repay. The LIC loan calculator is a valuable tool which makes this task easier by giving accurate approximations. This article describes why each policyholder needs to use the LIC loan calculator prior to borrowing and why it facilitates better financial planning.
Learning the LIC Loan Calculator
LIC loan calculator is a web-based facility that offers the policyholder the loan value he is eligible for, interest rates, and approximate EMI based on their policy details. Users can make a quick assessment of their eligibility for a loan by entering important inputs such as policy number, sum assured, policy type, and tenure.
The calculator is time and effort-saving as it does not have to be calculated manually. It provides immediate results, and therefore the policyholders can make proper decisions. In case you require money for a medical emergency, educational fee, or for any other financial requirement, by using the LIC loan calculator you can be assured that you will borrow less than your capability.
Key Benefits of Using the LIC Loan Calculator
1. Proper Estimation of Loan
One of the most important benefits of the LIC loan calculator is the fact that it can give accurate estimates of the loan. Because LIC permits policyholders to borrow a percentage of the surrender value of the policy, it is cumbersome to manually calculate this. The loan calculator makes this easy by giving accurate figures, which leaves no room for over-borrowing or underestimation of the loan amount.
2. Hassle-Free Instant Loan Planning
Being on a loan against insurance requires proper understanding of the repayment scheme. LIC loan calculator benefits the policyholders to design the loan by giving instant details on monthly payments. The users are free to modify input values for determining the best borrowing approach which best suits their financial capacity.
3. Enables Comparison of Loan Situations
Policyholders can contrast different borrowing scenarios using the LIC loan calculator. Tenure and loan amount can be changed to contrast the impact of different tenures and loan amounts on interest paid and EMIs. This enables borrowers to select a lending plan which minimizes financial distress the most.
4. Avoids Manual Errors
Physical estimation of interest, term, and EMI might not be accurate, which can affect financial planning. The LIC loan calculator calculates all these on automatic mode, reducing the likelihood of any error and enabling policyholders to take decisions based on facts.
5. Clarity in Loan Terms
Before using a loan against insurance, one should find out the rate of interest as well as repayment terms that will be charged. The LIC loan calculator promotes transparency because it shows the precise dissections of the loan, thus making the borrowers aware beforehand before applying.
How to Use the LIC Loan Calculator
It is simple and trouble-free to utilize the LIC loan calculator and involves a couple of simple steps:
Visit LIC Official Website – Visit the loan calculator section.
Input Policy Details – Input policy type, sum assured, and tenure.
Select Loan Amount – Slide the amount of loan within the allowed range.
Check Interest and EMI Calculations – Instant calculations will be given based on the policy surrender value.
Modify Inputs for Additional Info – Users can modify loan details to obtain the optimal borrowing facility.
Why All Policyholders Should Utilize the LIC Loan Calculator Prior to Borrowing
1. Ensures Financial Preparedness
Financial preparedness needs to be ensured prior to opting for a loan against insurance. Policyholders can determine repayment capacity with approximate EMIs and net interest outgo using the LIC loan calculator. This prevents future financial stress.
2. Prevents Over-Borrowing
Financial tension may occur due to over-borrowing beyond one’s repayment capacity. Policyholders are able to determine a safe borrowing amount with the help of LIC loan calculator and avoid subjecting oneself to unwanted financial tension.
3. Conserves Time for Decision-Making
By facilitating quick calculations, the LIC loan calculator prevents tedious manual computation. This facilitates quick loan procurement process and policyholders can receive cash without further ado.
4. Promotes Intelligent Borrowing
The LIC loan calculator makes borrowing intelligent since it allows the borrower to experiment with various repayment strategies. This assists policyholders in making the appropriate borrowing plan based on their expenses and income.
Other Things to Keep in Mind When Borrowing Against an Insurance Policy
1. Understanding the Impact on Policy Benefits
Borrowing on a life insurance policy reduces its surrender value. This would mean that upon policy surrender, the borrowed amount will be deducted from the benefits. This needs to be factored while budgeting money before borrowing.
2. Instability in the Interest Rate
LIC policy loan typically enjoys favorable interest rates, yet policy holders must keep themselves informed of any changes. Periodic usage of LIC loan calculator helps in reviewing how various interest rate changes impact EMIs and repayment as a whole.
3. Repayment Plans
The loan should be repaid by the borrowers in a way that interest is not compounded over time. Payment at an earlier date or payment of a part can relax the financial burden. The repayment schedule can be arranged with the help of the LIC loan calculator.
4. Loan Repayment vs. Premium Payments
When availing of a loan under insurance, the policyholders must continue paying the premium on the policy so that it is not lapsed. Non-payment of premium leads to policy lapse, affecting both insurance cover and repayment of the loan.
5. Think Through Alternatives Before Borrowing
Policyholders need to explore other alternative sources of finance such as home equity loans, personal loans, or emergency funds prior to taking insurance loan. They need to shop around different channels of finance in order to ensure that they are utilizing the cheapest means.
6. Impact on Claim Settlement
When a death occurs of a policyholder with an unsettled loan balance, the unsettled loan amount is deducted from the death benefit. This reduces the cash which should be paid to the dependents. Proper financial planning ensures dependents are paid the expected benefits without shock.
Conclusion
LIC loan calculator is an essential tool for any policyholder who would like to borrow funds from insurance. It simplifies the loan estimation process, encourages transparency, and allows borrowers to make smart decisions. Policyholders can easily determine the most appropriate loan amount, interest, and repayment term using this calculator without burdening them with any kind of financial difficulty. For immediate cash or long-term financial assistance, the use of the LIC loan calculator before borrowing ensures a hassle-free and tension-free experience. Make use of this amenity at all times when making your loan to avoid financial strain.
