If you are interested in a plain vanilla insurance and if you are eligible for it, then postal life insurance is a great value proposition
What is PLI?
Postal life insurance (PLI) is similar to insurance plans offered by other insurance companies such as LIC (Life Insurance Corporation of India). PLI is a contract entered into by the government to pay a given sum of money on the death of an insured to his nominee or himself, if he survives that period. PLI is a good option for people, who are ‘eligible’ for it, as it charges lower premiums and offers higher returns than comparable policies of life insurers.
Who can buy PLI?
PLI are offered only to employees of all central and state government departments, nationalised banks, public sector undertakings, semi-government organisations, local bodies like municipalities and zilla parishads, educational institutions aided by the government, etc. PLI also extends the facility of insurance to the officers and staff of the defence services and para-military forces. That is why the policy bond is sent to the office address of the insured.
Who runs PLI?
Started in 1884, PLI is managed by the Department of Posts under the Government of India. PLI was started as a welfare measure for employees of the posts and telegraphs department. As it started becoming popular, it was extended for the rest of bodies. Over the years, PLI has grown substantially from a few hundred policies in 1884 to 42.83 lakh policies as on 31 March 2010.
Types of policies
The postal department offers six plain vanilla plans: Suraksha (whole life assurance), Santosh (endowment assurance), Suvidha (convertible whole life insurance), Sumangal (anticipated endowment assurance), Yugal Suraksha (joint endowment) and Children’s Policy. PLI does not offer unit-linked insurance plans (ULIPs) and pension plans.
Where to buy PLI?
PLI is not available at all post offices in India. Some selected post offices—which have the PLI division—can offer this policy. At present, the PLI service is offered offline i.e. one cannot buy in online. An individual, who is eligible for this policy, needs to visit the PLI division of post office personally as there are no agents who sell this policy.
Age limit & maximum sum assured
In all policies the age limit is 19-55 years. PLI offers policies up to a maximum sum assured of Rs. 20 lakh.
Premium payment
The mode of premium payment can be monthly, half-yearly and annually. Policyholders can pay the premium on any working day of the month before or on the premium due date. Premiums can be paid at any of the post office across the country. Some selected government departments have the facility of recovering premium from salary. But it is better to take a premium passbook.
PLI benefits
PLI offers bonus rates higher than all types of policies compared to that of other insurance companies.
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It is not a simple saving scheme but provides immediate insurance coverage from the date of acceptance.
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These policies can be easily transferred to any place in India free of cost.
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The policy provides nomination facility.
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Rebate @ 1% for payment of six months premium in advance.
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Rebate @ 2% for payment of 12 months premium in advance.
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PLI offers conversion from whole life assurance to endowment assurance and from endowment assurance to other endowment assurance, according to the rules.
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Issue of duplicate policy bond in case of the original policy bond is lost or damaged.
If one forgets to pay one’s premium in a month, one can pay the premium in the subsequent month, by paying a minimum fine of Re. 1 per hundred of sum assured.
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Revival of lapsed policy: Policy lapses after six unpaid premiums if it remained in force for less than three years and after 12 unpaid premiums if it remained in force for more than three years.
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Loan can be taken from endowment assurance policy after completion of three years and for whole life after completion of four years.
Tax treatment
Investment in PLI gets all tax benefits any life policy is entitled for. The returns are tax-free and premium payment is subject to tax exemption under section 80C.
Can one continue the policy if one quits the government service?
One can continue by making payment at any one of the post offices throughout the country, even after quitting service.
Can one surrender the policy prematurely?
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Endowment assurance policy can be surrendered after 36 months.
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Whole life assurance policy can be surrendered after 48 months.
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Children policy can be surrendered after 60 months.
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No surrender for anticipated endowment assurance policy.
Can one get the full amount paid with accrued bonus, if policy is surrendered prematurely?
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Bonus will be taken into account after five years for surrender value calculation on the paid up value. But surrendering any policy prematurely is always a loss to the insured. Hence, it is suggested not to go for surrender.
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Full policy amount with accrued bonus will be given even if death occurs on the very next day of acceptance of the proposals for all bonafide cases.
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