Postal Life Insurance draws its origin from pre-independence era, when it was launched in 1884 from approval from the then Queen Empress of India. When the scheme started, the upper limit for life cover was Rs 4,000 only, which has subsequently been now increased to Rs 50 lakh.
Postal Life Insurance has come a long way since its inception in 1884 when it had few hundred policies to now around 43 lakh policies and now covers most of central, state and PSU employees along with regular consumers.
Types of Postal Life Insurance
Broadly Postal Life Insurance (PLI) offers following seven types of plans:
- Convertible Whole Life Assurance (SUVIDHA)
- Whole Life Assurance (SURAKSHA)
- Anticipated Endowment Assurance (SUMANGAL)
- Endowment Assurance (SANTOSH)
- Scheme for Physically Handicapped Persons
- Joint Life Assurance (YUGAL SURAKSHA)
- Children Policy
All these life insurance have their own features and come with a specific benefit along with catering to a specific segment of consumers. The details of all these types of policies are discussed in our separate article for Types of Postal Life Insurance.
Benefits of Postal Life Insurance
Not many of us would be aware that PLIs are the only life insurance in India today that offer the highest return on the lowest premium charges in comparison to other insurance products available in the market.
For a reference, a policy holder will have to pay around 26 to 36% lesser premium as compared to any other equivalent whole life insurance policy of LIC. That’s certainly a significant difference if considered seriously.
The only reason PILs are not really popular in India since they are offered by government owned Post Office Department and could not hold against the private players, who put a lot at stake when it comes to advertisement.
Along with the returns, the bonus offered by PIL can’t be matched by any other private player in the market. Along with other benefits, the following are quite noteworthy to be mentioned:
- Nomination can be changed at any point of the term
- Premiums can be paid at any of the post office branch, irrespective of where the policy was opened. Moreover, government officials can opt for paying the premiums directly from their salary account.
- The policy holder can take loan against the policy by pledging the policy to the Circle or Regional offices
- The policy can be assigned to any financial institution for taking loan
- If the original policy bond is burnt, lost or torn/mutilated, a duplicate policy bond can be issued immediately
- PIL policies get full tax benefits as any other insurance plans
- A whole life insurance can be converted to an endowment assurance and an endowment assurance can be converted to any other endowment assurance, as the policy holder wishes
How is Postal Life Insurance better than other Insurers?
Considering the returns and assurance it offers along with lowest premium in the market, PILs are certainly favorable choices for many. Let’s take an example here:
If a government employee of 30 years of age wants a risk cover of Rs 1 lakh under SANTOSH plan for 20 years, he would have to pay a premium of Rs 400 per month. However, a similar plan with Life Insurance Corporation (LIC) would ask for a premium of Rs 442.
At the maturity of the plan after 20 years, the policy holder would receive a total sum of Rs 240,000 with PIL, whereas he would receive a sum of Rs 204,000 with any LIC endowment assurance policy.
As you can yourself see from the calculations that you pay much more in LIC in terms of monthly premiums but end up getting lesser amount. However, with PIL, you get additional bonuses and thus receive a much higher amount.
If you are investing in PLI, you would get all the tax benefits a life insurance policy is entitled for under the Income Tax section 80C. The premiums paid as well as the returns too are tax exempted under section 80C.
On the flip side, PLI is certainly not for investors who are looking for aggressive or over-customized returns like ULIPs and Pension Plans. The Postal department offers only 7 type of plans and thus the dynamism is certainly missing.
Having said that, PLI is definitely for those who are looking for plan death cover along with long term financial security for self or for family and do not want to play much with their money. What is good with PLI that it offers normal death cover, while insurers like LIC and others generally offer accidental death benefits and that too with extra premiums.
If you are looking for a plain Vanilla Insurance and eligible for it, then PLI is certainly the best choice for you.
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