The uncertainty of life seems to be the only certainty. Under such circumstances, the best way that we can deal with the fear of the unknown is by getting prepared for an unknown territory. One such aspect is the scary thought about what would happen to our loved ones in our absence. Here's where life insurance policies come to the rescue.
The perfect financial security net for your family, life insurance plans are substantially effective towards ensuring that all your loved ones get to continue with all their major life goals without worries about financial stability.
While acknowledging the significance of life insurance plans in general, there is one specific plan category that has gained ground over the years - Postal Life Insurance. All thanks to its long-standing reputation for dependability, trustworthiness, and affordable premiums.
So, read on to learn how Postal Life Insurance can be the safety net you need in uncertain times!
What is Postal Life Insurance (PLI)?
Postal Life Insurance (PLI) is a government-backed life insurance scheme that is offered by the Department of Posts, Government of India. As of 2023, the scheme continues to provide affordable life insurance coverage to individuals, including government employees, defense personnel, paramilitary forces, and the rural and semi-urban population of India. Graduates as well as diploma holders from all recognized universities are now also eligible for post office life insurance.
The premium payments for the PLI policy are made through post offices across the country. The scheme also offers loan facilities against the policy's surrender value.
Overall, PLI is a reliable and popular life insurance option in India, especially for individuals seeking affordable insurance coverage. The scheme provides an important safety net for individuals and their families, ensuring financial security in case of unforeseen events.
How Postal Life Insurance stand out from Standard Term Insurance Plans?
PLI is a government-run insurance programme to give policyholders and their families financial stability and security.
The primary distinction between PLI and other types of life insurance is that PLI is provided by the government, whereas other types of life insurance are offered by private insurance companies. As a result, PLI policies are typically more cost-effective than other types of life insurance and offer higher rates of interest than many other types of investment options.
However, one limitation of PLI is that it is only available in India and is primarily meant for government and semi-government employees in India. In contrast, other life insurance policies may be available to people in different countries and regions.
Overall, both PLI and standard life insurance plans provide policyholders and their families with financial security, but PLI is a special, government-run programme with certain advantages and restrictions, which we will be examining in this article.
Types of Postal Life Insurance (PLI) Policies
Several types of Postal Life Insurance (PLI) plans are available under the Post Office Insurance Scheme in India.
- Whole Life Assurance (Suraksha): This lifetime coverage plan provides financial security to the policyholder's family in case of his/her untimely death. The premium payments for this plan are fixed and remain constant throughout the policy's term. This policy can be converted into Endowment Assurance Policy up to 59 years of age of the insurant provided the date of conversion does not fall within one year of the date of cessation of premium payment or date of maturity.
- Endowment Assurance (Santosh): This plan offers a combination of life insurance coverage and savings. The policyholder pays a fixed premium for a specified period, and on maturity, the policyholder receives the sum assured along with the accumulated bonus.
- Convertible Whole Life Assurance (Suvidha): This plan allows the policyholder to convert their policy to an endowment plan after a specified period. The premium payments for this plan are also fixed.
- Joint life assurance (Yugal Suraksha): This plan covers the lives of two individuals under a single policy. The premiums for joint life assurance policies are typically less expensive than purchasing two separate policies, making it an attractive option for some individuals. It is important to note that joint life assurance policies only pay out once, typically upon the first death of the two individuals covered. After the payout, the policy will generally end, and no further benefits will be provided.
- Anticipated Endowment Assurance (Sumangal): This plan provides a lump sum payment at specified intervals during the policy term, in addition to the sum assured and the accumulated bonus on maturity.
- Children Policy (Bal Jeevan Bima): This plan provides insurance coverage for the children of policyholders. The policy matures when the child turns 18, and the sum assured, along with the bonus, is paid out to the child.
Which policy to prefer?
| Policy Name | When to prefer | Example |
|---|---|---|
| Whole Life Assurance Policy | If you want lifetime coverage | Rakesh is the sole breadwinner of his family, he chooses Whole Life Assurance Policy to ensure that his family is financially secure even after his death. |
| Endowment Assurance Policy | If you want both savings and insurance benefits | Rakesh wants to save for his child's education and also secure their future in case of his untimely demise, he chooses Endowment Assurance Policy. |
| Convertible Whole Life Policy | If you want flexibility in changing the policy type | Rakesh is unsure about his future financial needs and wants the option to switch to another policy type later, he chooses Convertible Whole Life Policy. |
| Joint Life Assurance Policy | If you want to cover multiple people under a single policy | Rakesh and his wife want to take a policy that covers both of them, they choose Joint Life Assurance Policy. |
| Anticipated Endowment Policy | If you want to receive periodic payments in addition to the sum assured | Rakesh wants to receive regular payouts to fund his retirement, he chooses the Anticipated Endowment Policy. |
| Children Policy | When looking to secure the future of children | Rakesh wants to secure the future of his children's education and other needs in case something happens to him. |
Postal Life Insurance Scheme Details
The table provides a general overview of the main features of each PLI scheme. The exact terms and conditions may vary depending on the policyholder's circumstances.
| Scheme Name | Minimum Age | Maximum Age | Policy Term | Minimum Sum Assured | Maximum Sum Assured | Maturity Benefit | Death Benefit | Loan Facility |
|---|---|---|---|---|---|---|---|---|
| Whole Life Assurance | 19 years | 55 years | - | Rs. 20,000 | Rs. 50 Lac | Sum Assured + Bonuses | Sum Assured + Bonuses | Yes After 4 years |
| Endowment Assurance | 19 years | 55 years | 5-35 years | Rs. 20,000 | Rs. 50 Lac | Sum Assured + Bonuses | Sum Assured + Bonuses | Yes After 3 years |
| Convertible Whole Life Assurance | 19 years | 55 years | - | Rs. 20,000 | Rs. 50 Lac | Sum Assured + Bonuses | Sum Assured + Bonuses | Yes After 4 years |
| Joint Life Assurance | 21 years | 45 years | 5-20 years | Rs. 20,000 | Rs. 50 Lac | Sum Assured + Bonuses | Sum Assured + Bonuses | Yes After 3 years |
| Anticipated Endowment Assurance | 19 years | 45 years | 15 and 20 years | Rs. 20,000 | Rs. 50 Lac | Anticipated payouts at 5-year intervals + Final payment | Sum Assured + Bonuses | Yes |
| Children Policy | 5 years | 20 years | - | Rs. 1,000 | Rs. 3,00,000 | Sum Assured + Bonuses | Sum Assured + Bonuses | No |
Features of Postal Life Insurance Policies
- Insurance Coverage: Postal Life Insurance provides life insurance coverage to individuals at affordable premiums. The coverage amount depends on the policy selected and the premium paid.
- Premium Payment: Premium payment can be made monthly, quarterly, half-yearly, or annually, depending on the policy terms.
- Nomination Facility: PLI allows policyholders to nominate a beneficiary who will receive the sum assured in the event of the policyholder's death and can also make changes to the nomination.
- Loan Facility: Policyholders can avail of a loan against their policy after completing three years of the policy tenure.
- Surrender Value: If a policyholder wants to discontinue their policy before its maturity, they can surrender it and receive the surrender value as per policy terms.
- Revival of Policy: If the policy lapses due to non-payment of premiums, the policyholder can revive the policy within five years from the date of the last premium payment.
- Grace Period: Postal Life Insurance allows a grace period of one month for premium payment. During this period, the policy remains in force, and no interest is charged on the outstanding premium.
- Conversion of Policy: Policyholders can convert their PLI policies into Endowment Assurance policies or Whole Life Assurance policies after three years of the policy tenure.
- Free Look Period: A policyholder can cancel their policy within 15 days from the date of receipt of the policy document and receive a refund of the premium paid.
- Duplicate Policy Document: In case of loss or damage to the policy document, a policyholder can obtain a duplicate copy by submitting an application and paying the prescribed fee.
Postal Life Insurance Scheme Bonus
PLI provides bonus payments to policyholders based on the performance of the scheme's investments. These bonus payments are in addition to the guaranteed benefits offered by the policy. The bonus is declared annually, and the rate of the bonus varies based on the type of policy and the performance of the PLI fund.
The bonus is calculated as a percentage of the sum assured and is added to the policy's accumulated savings. The accumulated bonus is paid out to the policyholder upon the maturity of the policy or in case of the policyholder's death.
Overall, the bonus payment under the PLI scheme serves as an added benefit to policyholders and can increase the overall value of the policy.
PLI Policy Bonus for the FY 2023-2024
| Type of PLI Scheme | Bonus Rate |
|---|---|
| Endowment Assurance (EA) | ₹52 per ₹1,000 of the sum assured amount |
| Whole Life Assurance (WLA) | ₹76 per ₹1,000 of the sum assured amount |
| Convertible Whole Life Policies | ₹76 per ₹1,000 of the sum assured amount (for Whole Life bonus rate) However, on conversion, the applicable rate will be equal to the Endowment bonus rate. |
| Anticipated Endowment Assurance | ₹48 per ₹1,000 of the sum assured amount |
Benefits of Postal Life Insurance Policy
- Income Tax Exemption: Premium paid towards PLI is eligible for tax exemption under Section 80C of the Income Tax Act, 1961.
- Low Premium Rates: PLI offers some of the most affordable premium rates in the market.
- Additional Facilities Offered: PLI offers several additional facilities such as loans against the policy, surrender value, and revival of lapsed policies.
- High Sum Assured: PLI offers a high sum assured, which is up to Rs. 50 lakhs.
- Transferred to any Circle within India: PLI policy can be easily transferred to any Circle within India at no additional charges.
- Passbook Facility: PLI provides a passbook facility to policyholders to keep track of their premium payments and policy details.
- Discounts on advance Premium Payment: Policyholders can pay their premium in advance for up to two years.
- A 1% of the value discount on the premium is available if you pay your premium in advance for a six-month insurance period.
- A 2% of value discount on the premium is available if you pay your premium in advance for a twelve-month insurance period.
8. Quick Claims Process: The claims process of PLI is quick and hassle-free.
9. No Medical Examination Required: PLI does not require a medical examination for policies with a sum assured up to Rs. 5 lakhs.
Postal Life Insurance Eligibility
Postal Life Insurance (PLI) offers eligibility to various categories of individuals and organizations. Eligible individuals include Defense Services personnel, Para Military Forces personnel, Central and State Government employees, employees of Local Bodies, employees of the Reserve Bank of India (RBI), graduates and diploma holders, employees of Government-aided Educational Institutions, employees of Public Sector Undertakings, employees of Nationalized Banks and Financial Institutions, employees of Autonomous Bodies, contract-based employees in Central/State Government, employees of all Scheduled Commercial Banks, Extra Departmental Agents in the Department of Posts, and employees of accredited Educational Institutes.
In addition to individuals, certain organizations and entities are also eligible for PLI. These include Credit Co-operative Societies and other Co-operative Societies registered with the Government under the Co-operative Societies Act, which are partly or fully funded by the State Government, Central Government, RBI, Nationalized Banks, State Bank of India (SBI), National Bank for Agricultural and Rural Development (NABARD), and others. Joint ventures with a minimum 10% government/PSU stake are also eligible for PLI.
These eligibility criteria ensure that a wide range of individuals and organisations, including government employees, defense personnel, educational institutions, banks, and co-operative societies, have access to Postal Life Insurance services.
Conclusion
In conclusion, Postal Life Insurance (PLI) is a popular insurance scheme offered by the Indian Postal Service. The scheme has been designed to provide affordable life insurance coverage to individuals, including those who reside in rural areas of India. The post office insurance plan offers a range of policy options to choose from, including endowment policies, whole-life policies, and term policies. PLI scheme benefits include flexible premium payment options, tax benefits, and a loan facility. The post office insurance schemes are known for their simple application process and quick claim settlement. Overall, Postal Life Insurance is a reliable and convenient option for individuals looking for affordable life insurance coverage in India.