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Hi Shravani,
When the loan amount is greater than a lakh, some banks usually prefer students to have Life Insurance Corporation (LIC) policies equivalent to, or more than, the loan amount. This is nothing more than a security feature that also forms a part of your collateral. In case the student is not able to pay back the loan, the bank does not lose money on it and can recover the outstanding amount from the student's LIC policy.
Dear Aspirant,This policy is taken
This policy is taken by banks so that in case of unexpected death of the loan taker (student), the money can be recovered through the life insurance amount.
This is a very good policy of all the major banks giving education loan so that the dependants are not bothered to repay the education loan taken which may be in lakhs.
Best wishes
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