LIC Loan Interest Rate Calculator 2025 | Powerful Insights

Calculate your loan EMI, total interest, and repayment schedule

Loan Details

Loan Amount (₹)

₹ 5,00,000

Interest Rate (% per annum)

8.5%

Loan Tenure (Years)

5 Years

Loan Type

Loan Summary

Monthly EMI

₹ 10,260

Total Interest Payable

₹ 1,15,600

Total Payment (Principal + Interest)

₹ 6,15,600

₹ 5,00,000

Principal Amount

₹ 1,15,600

Total Interest

Principal

Interest

Amortization Schedule (First 12 Months)

Month	EMI	Principal	Interest	Balance

What is LIC Loan interest rate calculator

There is a computerised tool known as a LIC loan interest rate calculator that provides policyholders with the ability to estimate the amount of interest they would pay on a loan that is taken out against their Life Insurance Corporation (LIC) policy. The financial commitment that must be made before obtaining the loan is presented straightforwardly and concisely.

Entering the following information into the calculator is necessary in order to use it: the surrender value of the policy (which is used to determine the maximum loan amount), the desired loan amount, the yearly interest rate that is established by LIC, and the intended loan tenure. Following this, the calculator will process the information, and it will typically generate an estimate of the Equated Monthly Installment (EMI), the total interest that will be payable over the course of the loan duration, and the total amount that will be refundable.

This instrument is essential for long-term financial planning. On the other hand, it enables policyholders to evaluate their affordability, evaluate the costs of their policy in comparison to those of other loan options, and make an educated decision about whether or not to leverage their policy without putting their long-term financial stability or insurance coverage at risk.

How to calculate lic loan interest raate

Utilising a popular approach known as the Reducing Balance Interest Calculation, the process of calculating the interest on a loan from a LIC insurance is straightforward and easy to understand. This indicates that you will only be responsible for paying interest on the principal amount that is still outstanding, rather than on the total amount of the initial loan.

The Key Components

First, you need three pieces of information:

Loan Principal (P): The amount you borrowed.
Annual Interest Rate (R): The rate set by LIC (e.g., 9% per annum).
Time Period (T): The time for which you want to calculate interest, usually in years or months.

The Standard Formula

The formula for calculating simple interest on a reducing balance is:

Interest for a Year = (Outstanding Loan Amount × Annual Interest Rate) / 100

For shorter periods, like months:
Interest for a Month = (Outstanding Loan Amount × Annual Interest Rate) / (12 × 100)

Step-by-Step Calculation Example

Let’s say you have a LIC policy loan with the following details:

Loan Amount (P): ₹1,00,000
Annual Interest Rate (R): 9%
You want to find the interest for one year before making any payments.

Calculation:
Interest for Year 1 = (1,00,000 × 9) / 100 = ₹9,000

Now, suppose you pay an EMI of ₹10,000 at the end of the first year. The outstanding balance for the next year would be:

Outstanding Principal = ₹1,00,000 (Principal) + ₹9,000 (Interest) – ₹10,000 (Payment) = ₹99,000

Interest for Year 2 would be calculated on this new, reduced balance:
Interest for Year 2 = (99,000 × 9) / 100 = ₹8,910

As you can see, the interest amount decreases each year as the outstanding principal reduces.

The Easiest Method: EMI Calculator

While you can calculate this manually, it’s cumbersome for long tenures. The simplest and most accurate way is to use an Online LIC Loan EMI Calculator.

You just enter:

Loan Amount
Interest Rate
Loan Tenure (in years)

The calculator instantly tells you your Monthly EMI (Equated Monthly Installment), the total interest you’ll pay over the entire loan period, and a detailed payment schedule (amortization table).

Key Features of a LIC Loan Interest Rate Calculator

A LIC Loan Interest Rate Calculator is designed for clarity and financial planning. Its standout features include:

EMI calculation: Your Equated Monthly Installment (EMI) is promptly computed based on the loan amount, interest rate, and tenure. This is the primary function of the system. This allows you to evaluate the impact on your monthly budget.
Detailed Amortization Schedule: This is a critical feature. It provides a year-by-year or month-by-month breakdown of each payment, showing how much goes toward the principal and how much toward interest, illustrating the loan’s reducing balance.
Total Interest Visualization: Throughout the entirety of the loan’s term, the calculator presents the total amount of interest that must be paid. By doing so, you will be able to comprehend the actual expenses associated with borrowing against your policy.
User-Friendly Inputs: It is just necessary to provide three fundamental inputs: the amount of the loan that is desired, the annual interest rate that is applicable, and the repayment time. The UI is normally straightforward to understand.
What-If Analysis: It is possible to carry out scenario planning by modifying the loan amount or the duration of the loan. On the other hand, expanding the tenure will result in a decrease in the EMI but will result in a rise in the total interest, which will allow you to strike the best balance.

lic loan interest rate against policy

Loan is Against the Cash Value: The interest rate is applied to the money you borrow from your policy’s accumulated cash value, not the death benefit.
Interest Accrues: If you don’t pay the interest, it is added to the loan balance.
Reduces Cash Value/Growth: The outstanding loan (principal + accrued interest) reduces the policy’s cash value and can hinder its future growth.
Risk of Lapse: If the total loan balance (including unpaid interest) grows too large and exceeds the cash value, it can cause the policy to terminate (lapse), creating a taxable event.
Competitive Rates: Policy loan rates are often lower than personal loan or credit card rates, but they are not free.