The Postal Life Insurance – India’s Oldest Life Insurance Provider, yet we know nothing about it

As one of the Oldest Life insurance provider in the country, Postal Life Insurance (PLI) came into the form on 1st February 1884. It was formulated under the regime of the British Government (by orders of Queen Victoria who was the British Monarch at that time), and the Secretary of the State gave the express approval for its launch. Sir F.R.Hogg, who was then, the Director General of Post Offices, initially proposed it in the year 1881. The intent of this rural postal life insurance scheme was for the welfare of the Postal employees; however, later it went on to provide cover to all employees of the Telegraph department as well. Another milestone that the organisation achieved was in the year 1894, when they extended this welfare scheme for the benefit of the Female workers of the Post & Telegraph Department, especially considering that, at that time, no other company covered females under any Life insurance policy.

When it started the postal life insurance plan covered a max insurance amount of Rs. 4000. The Post Office Insurance, commonly known as Postal Life Insurance began to with covering only Post & Telegraph department employees, but now the coverage has been extended to all Government employees – be it Central or State government employees and it also covers employees of Public Sector Undertakings (PSU) and large organisations. Hence, this Postal Life Insurance Scheme can no more be called an intra-departmental welfare scheme as it is available for public as well. Calculating the amount of premium under each policy also is very easy through the Postal life insurance premium calculator. Premium payment is also not a humungous task; one can easily pay his premium using the postal life insurance online payment option.

What is Postal Life Insurance?

The Postal Life Insurance Scheme provides Life Insurance cover with an intent to provide higher returns on lesser premium. One can opt for a Sum assured of max Rs. 50 Lakhs under this insurance scheme. It is principally governed by the Government of India and is provided to all Government employees. All employees falling under the below-mentioned companies can easily opt for the Post Insurance scheme:

  • Autonomous Bodies
  • Local Bodies
  • Universities
  • Public Sector Undertakings
  • Financial Institutions & Nationalised Banks
  • Government Aided Educational Institutions
  • State & Central Government employees
  • The Medical Council of India, the Nursing Council of India, Dental Council of India & Pharmacy Council of India
  • All private Schools / Colleges / Universities affiliated to recognized Boards (i.e. ICSE, CBSE, State Boards etc)
  • Reserve Bank of India
  • Joint Ventures which have at least 10% Government/ PSU stake
  • Professionals such as Doctors, Resident Doctors, Engineers, Lawyers, Management Consultants, Chartered Accountants etc.

The Postal Life Insurance has also launched a group insurance scheme for “Gramin Dak Sevaks”, the Extra departmental employees of the Postal Department. Postal Life Insurance, as an organisation, has grown rapidly in the last century. During the earlier years of its inception, it hardly sourced about a couple of hundred policies, but the current figures quote a whopping 6.4 million policies (the figures are until 31st March 2015).

Benefits of Investing in PLI

As a customer, one will enjoy various life insurance benefits from the Postal Life Insurance scheme:

  • In comparison to any other Life Insurance provider in the industry, Postal Life Insurance provides the highest Sum Assured at the lowest premium rates. It also provides the highest bonus component to its customers
  • The policy can help the individual get a loan against his insurance plan after 3 years of buying an Endowment policy and after waiting for 4 years in case of a Whole Life Insurance policy
  • The incumbent also gets the PLI Tax benefits under the Sec 80C of the Income Tax Act. This means that you can save on your Income Tax as well if you take up a Postal Life Insurance policy
  • A transfer of the policy to any part of the country is also possible in the Postal Life Insurance scheme at no extra charge
  • For the convenience of its customers, the Postal Life Insurance has provided flexible premium payment options. One can choose to pay the premiums on a monthly, quarterly, half-yearly or yearly basis
  • Other facilities like Surrender, Paid up Value, Conversion of the plan, Assignment of policy and Loan etc are also available in the Postal Life Insurance policy
  • One can also avail a Passbook to keep track of the premiums paid and if a loan is availed
  • You can assign a nominee to your policy and also change the nominee anytime you want
  • An option of advance premium payment is also available, and if you pay in advance, you also enjoy a discount of 1% on your total Premium paid
  • The Post Office Insurance also guarantees smooth and fast claims process, as they have a centralised monitoring & accounting system

Postal Life Insurance Eligibility

The minimum basic PLI eligibility is the age of the policyholder. The age of the person applying for the policy should be between 19yrs – 55yrs. The only exception is in the Child plan category where the age group is between 5-20 yrs.  Since this is not a scheme for the masses, it is an exclusive Government Insurance Scheme; hence, the people who can leverage of this policy also need to be either Government employees or related organisations. Below mentioned is a detailed list of all organisations whose employees can buy a Postal / Rural Life Insurance Policy:

  • Central Government
  • State Government
  • Defence Services
  • Para-Military forces
  • Reserve Bank of India
  • Government-aided Educational Institutions
  • Financial Institutions & Nationalized Banks
  • Local Bodies
  • Public Sector Undertakings
  • Autonomous Bodies
  • People appointed by the Central/ State Government on a contract basis, with a contract extension option.
  • Employees of all Scheduled Commercial Banks
  • Employees who work in educational institutes, which are affiliated by recognized bodies such as All India Council of Technical Education, Medical Council of India, National Assessment and Accreditation Council, etc.

Advantages of Postal Life Insurance Policies

The Postal Life Insurance Scheme offers a lot of advantages to its customers, and hence it is very popular amongst Government employees. In fact, a lot of non-government employees also want to take up the Postal Life Insurance Policy. Some of the advantages provided are:

  • The Policyholder can change the name of the nominee anytime during the policy term, and the procedure is also very simple
  • If you have lost the Policy Bond, getting a Duplicate policy bond reissued on your name is also not a challenge
  • A general fear that people have is that if they miss their premiums, the policy will get lapsed. However, in the postal life insurance policy scheme, if a person has missed paying premiums for 6 months consecutively, he can still revive his policy provided the policy was in force for less than 3 yrs. If the policy was in effect for more than 3 years, then the unpaid premiums term would go up to 12 months as well
  • Assignment of the policy can also be done and a loan can be procured from any Financial Institution
  • The policyholder can avail a loan on behalf of the Policy is he/ she pledges his/her policy to Heads of the Circle/Region on behalf of President of India. The only prerequisite is that the policy has to be at least 3 years old in case of an Endowment Assurance policy and 4 years old in case of a Whole Life Assurance policy
  • One could also convert his Whole Life Assurance policy to an Endowment Assurance policy and from an Endowment Assurance policy to any other Endowment Assurance policy, based on certain rules and regulations

Types of Postal Life Insurance Schemes

The Postal Life Insurance Scheme brings for its customers six different types of traditional plans. Let’s have a look at what each of them and what they have to offer:

  1. Whole Life Insurance (Suraksha): This is a typical Whole Life Insurance plan, which provides protection/cover till the age of 80 years. On maturity of the policy, it provides the Sum Assured along with the accrued Bonus to the policyholder when he completes 80 years of age.
  2. Endowment Assurance (Santosh): This is a traditional Endowment plan which goes on to a certain term, and on completion of the term, the Policyholder gets the Sum Assured plus the Accrued bonus.
    1. The minimum age of the applicant to get started is 19 years with the maximum entry age being 55 years
    2. The minimum sum that can be insured is 20000 INR, and the maximum amount can be 10 Lakh INR
  3. Convertible Whole Life Insurance (Suvidha): This is a unique policy that provides an option of Converting the policy into an Endowment policy after 5 years completion of the policy. If it is not converted until the 6th year, then it continues to serve as a Whole Life Insurance policy.
    1. Upon the policyholder takes a loan against the policy or surrenders the policy for some reason, a proportionate bonus will be reduced from the accrued amount.
  4. Anticipated Endowment Assurance (Sumangal): This is a money back policy, which offers two options – a 15 year Money back policy & a 20 year Money back policy.
    1. The Maximum sum insured in this insurance plan is 5 lakh.
    2. The 15-year policy brings benefits in increasing percentages –
      1. 20% – 6 years, 9 years, 12 years
      2. 40% – 15 years
    3. The 20-year policy brings benefits in increasing percentages –
      1. 20% – 8 years, 12 years, 16 years
    4. 40% – 20 years
  5. Joint Life Endowment Assurance (Yugal Suraksha): As the name suggests, this is a joint life insurance policy which can cover both spouses under one policy
  6. Children Policy (Bal Jeevan Bima): This is a Child Insurance policy taken on the Child’s name for his future education, marriage etc.

Postal Life Insurance Scheme Bonus

The Post Office PLI scheme offers some very lucrative Bonus Rates for its customers. In comparison to the other Life Insurance Providers in the market, the Post Office Life Insurance Scheme offers the best Bonus Rates. Bonus Rate is nothing but an annual amount that is accrued or added to your policy as an interest given by the Life Insurance provider. It is calculated by a method of Rupees over every Thousand of the Sum Assured. For example, if the Bonus Rate is 50, then it means that for every Thousand Rupees of the Sum Assured, the customer will get Rs 50 added annually to his policy. Eg. if Ramesh buys an Insurance of 500,000 Sum Assured and the Bonus Rate for Fy 18-19 is 50, then for that Financial year, he will get 50 x 500 Bonus points i.e. Rs. 25000. Mentioned below is the PLI scheme Bonus Rate chart for various policies:

Sr. No Type of Insurance Bonus Rate
1 Endowment Assurance Rs 50 for every Thousand Sum Assured
2 Whole Life Assurance Rs. 60 for every Thousand Sum Assured
3 Anticipated Endowment Assurance Rs. 47 for every Thousand Sum Assured
4 Convertible Whole Life Policies The rate applicable will be that of the Whole Life Insurance, and if the policy is converted, then the Endowment policy rates would apply.

Postal Life Insurance Customer Guidelines

Like any other Life Insurance company, the Postal Life Insurance Scheme also has a few guidelines for its customers:

  • The policy number, which is generally printed on the policy bond is critical to maintaining records as all your future transactions as Premium payment etc.. will be done with the use of the Policy number. The policy number will also be required during the Claim settlement process
  • Regular Premium payment is a mandate for the policy to be in force. In case of non-payment of the premium, the policy will lapse, and the cover will also be dissolved. The premium payment date is the 1st of the month and a grace period till the end of the month is also provided
  • Since this is an employment-based Life Insurance scheme, the policyholder can choose to get the premium deducted from his salary as well. Once the approval is taken from the organisation, the premium will get regularly deducted from his salary
  • The premium payment for the Postal Life Insurance policy can be done via online or offline methods. You can pay online through the PLI customer portal. You can also set up an ECS on your Debit / Credit Card, or choose to pay by Cash or Cheque at the Post offices
  • Your accurate contact details is a must for any communication the Postal Life Insurance would need to do with you pertaining to a claim or a Moneyback or any other related information.

Postal Life Insurance Forms

There are a set of forms that may come in handy during the tenure of your policy with the postal insurance scheme, which is available on the official website http://www.postallifeinsurance.gov.in/html/pli_plans.html:

  • RPLI (Rural Postal Life Insurance) Form: This is an application form for your Rural Postal Life Insurance policy
  • RPLI Medical Form: If a medical check is required, this form needs to be filled
  • Child Proposal Form: This is an application form if you are opting for the Child policy
  • Loan Application Form: If you need to apply for a loan against your policy
  • PLI Claim Form: If you are availing the claim of your policy, whether on maturity or due to a sudden instance, this form needs to be submitted
  • PLI revival form: when a policy lapses and you want to revive it again, this form needs to be filled
  • RPLI maturity form: Needs to be filled during policy maturity
  • RPLI surrender form: If you want to Surrender your policy mid-way before maturity due to any reason, this form needs to be submitted
  • Survival Benefit Form: Same as Maturity form

Postal Life Insurance Premium Calculator

There is an online RPLI premium Calculator available on the Postal Life Insurance website, through which you can easily calculate your premium amount. The calculator will prompt you to fill in some basic details like – your age, type of policy, required Sum Assured, Policy term etc. and then it will calculate an approximate PLI premium basis those details and populate the result on your screen. You can choose from Sum Assured between Rs. 10,000 to Rs. 5,00,000.

FAQs

What is the main differentiation between Postal Life Insurance and other Insurance?

The main difference between Postal Life Insurance and any other Insurance company is that the PLI scheme can only be availed by Government employees and some Public Sector employees. Also, PLI offers High returns in Low premiums.

Who is eligible to use this insurance?

Autonomous bodies,  Local Bodies, Defense Services & Para Military forces, RBI & Nationalised Banks, Public Sector undertakings and people working in Government organisations, etc. are eligible for PLI.

Does Postal Life Insurance have any guarantor?

Since it is formulated by the Government of India, it is guarded and guaranteed by them

Do both spouses need to be Government employees to avail Postal Life insurance?

If you opt for the “Yugal Suraksha” scheme, both husband and wife are covered under the same policy irrespective of one of the spouses not being in a Government job.

If the insured quits Government service, can they continue using the scheme?

Yes, he can continue using the policy till the time it is in force, and he is paying premium regularly.

Can an insured, revive a lapsed policy?

If a person has missed paying 6 premiums, he can still revive his policy provided the policy was in force for less than 3 yrs. If the policy was in force for more than 3 years, then the unpaid premiums term would go up to 12 months as well

Can one surrender their life insurance from PLI?

Yes, a policy can also be surrendered; however, the Surrender value depends completely on term and type of policy.

Can an insured avail loan facility from PLI?

Yes, but it completely depends upon the term of the insurance until he has paid and the type of insurance policy.

How many child policies in a family, can the main policyholder take?

A policyholder can take up to maximum 2 Child policies for his family.

What is the maximum insurance amount for a policy from Postal Life Insurance?

The maximum Sum Assured that is available in Postal Life Insurance is 5 Lakh.