What is PLI (Postal Life Insurance)?
PLI (Postal Life Insurance) is just like LIC or ICICI Pru Life Insurance. The only difference is that it is run and managed by the Post Office. There are currently only traditional plans available through PLI. ULIPs and term insurance are therefore not available.
What types of policies does PLI (Postal Life Insurance) offer?
The traditional endowment products offered by PLI are listed below.
1) Whole Life Assurance Policy (Suraksha).
This is a perfect match for the Whole Life Policy of LIC. After the policyholder’s passing, the nominee will receive the accrued bonus and sum guaranteed. Entry requirements range from 19 years of age to 55 years of age. The minimum and highest sums insured are Rs. 20,000 and Rs. 10,000, respectively.
2) Endowment Assurance (Santosh).
In this type of endowment plan, the policyholder receives both a sum assured along with a bonus when he survives until the maturity date of his policy. He will be entitled to receive the sum assured as well as an accrued bonus in the event he dies during the period of the policy. There are the same eligibility criteria for Whole Life Assurance Policy (Suraksha) that apply to this policy as well.
3) Convertible Whole Life Assurance (Suvidha).
The Endowment Assurance plan is exactly the same as the Endowment Assurance plan. It is only when you do not convert this policy into Endowment Assurance that it will be treated as Whole Life Insurance if you do not convert it to Endowment Assurance.
4) Anticipated Endowment Assurance (Santosh).
The maximum sum assured under this endowment plan is capped at Rs.5,00,000. It is a typical money-back endowment plan with a fixed sum assured. There are two types of plans that PLI offers in this category. A 15-year term is available for one, while a 20-year term is available for another.
5) Joint Life Assurance (Yugal Suraksha).
As a co-insured on this policy, you can purchase it with your spouse as well. If a spouse wishes to take advantage of this facility, he or she must be eligible to purchase PLI. You are covered for both husband and wife under your life insurance policy up to the amount of sum assured you purchased. It is possible to get up to Rs. 1,000,000 as the maximum sum assured.
6) Scheme for physically handicapped persons.
Specifically designed for handicapped persons, this plan is one of a kind. The premium will be raised or increased depending on the condition of the handicap. The rest of the features of the plan are exactly the same as those of the other plans.
7) Children’s Policy
PLI began offering child policies in 2006. Below are a few features.
It mainly covers the life insurance of children.
A maximum of two children can be insured in a family.
Children between 5 Yrs to 20 Yrs are eligible for this plan.
The maximum Sum Assured is Rs.1,00,000.
Premium waiver benefit in case of the main policyholder dies.
In case of the death of children, then the sum assured along with the bonus be payable to the main policy holder.
The responsibility for premium payment rest with the main policyholder.
How do PLIs and LICs differ?
Employees of the Central and State Governments, Public Sector Undertakings, Universities, Government-aided Educational Institutions, Nationalized Banks, Local bodies, etc., are eligible to purchase PLI. In addition, PLI extends the facility of insurance to officers and staff members of the Defense Services and Para-Military Forces in addition to civilians. As opposed to this, LIC offers its plans to all Indian citizens regardless of their nationality. In terms of flexibility when it comes to buying, LIC has the edge over PLI in terms of the ability to do so. I would like to refer you to my latest post entitled “New Eligibility for PLI (Postal Life Insurance).”
There are no differences in the plans that are offered. In order to meet the needs of the people, LICs, and PLIs are mostly reliant on traditional endowment type of life insurance plans. In addition to that, LIC also offers term insurance (LIC recently introduced an online term insurance product), which is not at all affected by the PLI plan.
As compared with LIC or any other private insurer, PLI offers cheap premiums when compared to LIC or any other private insurer. In other words, this is one of the most significant advantages of buying endowment plans from PLI than from LIC.
As far as the bonus rate is concerned, the bonus rate that PLI offers is between 7% and 10%. The bonus rate currently offered by LIC is around 4% to 5%, whereas, in the past, it was higher.
Where do I buy PLI-In the case of PLI, you have to visit the Post Office where these schemes are available to be purchased. The LIC, on the other hand, is easy to find agents, whereas the former cannot be said for the latter. There are agents who can provide this service at your doorstep, so you don’t have to travel far. Furthermore, LIC has also recently launched an online purchasing platform (restricted to term plans and pension plans) along with that other feature. It is therefore evident that LIC offers more flexibility in the case of buying than PLI in the case of insurance.
In terms of age limit, PLI provides coverage for individuals between the ages of 19 and 55. LIC, on the other hand, offers insurance coverage for up to 75 years (although it is not available in every policy).
The maximum sum insured that PLI offers is Rs.50 lakh, which is the highest sum assured that is available. In contrast to this, LIC offers a maximum sum assured that is unlimited.
If you are a member of LIC, you can pay your premium in the branch, at a collection point or online through your account. One of our readers recently informed us that the Post Office also offers a facility to pay premiums online. This has not been checked by me, however. The best thing you can do is cross-check with the Postal Officials and proceed from there.
Benefits of PLI and LIC – Both PLI and LIC provide the same tax benefits for deductions under Sec.80C of the Income Tax Act.
As a result of all these features and differences between PLI and LIC, it seems to me that PLI is still stuck in the past. The insurance is less comprehensive, entry is restricted to only a few individuals, there are service issues, there is no term insurance, and there is an age limit. However, there are only two positive points that can encourage you to choose PLI, and these are the lower premiums and a higher bonus.
