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Postal Life Insurance Interest Rates in India

TeamAckoMay 13, 2024

Postal Life Insurance (PLI) is a government-operated life insurance scheme in India that provides insurance coverage to the employees of central and state governments, defence personnel, and other government organisations. It was established in 1884 for the Postal Department employees and extended to other departments' employees.

It is one of the oldest and best insurance schemes in the country. In this article, let’s explore how it works, benefits, types, and postal life insurance interest rates.

Here's how it works:

Eligibility: PLI is primarily available to employees of the central and state governments.
Policy Options: PLI offers various policies, including Endowment and Whole Life plans. Each policy type has its features and benefits.
Coverage: PLI provides life insurance coverage to policyholders for a specified period or until death, depending on the policy type chosen. In the event of the policyholder's death, the sum assured, including bonuses if available, is paid to the nominee.
Premium Payment: Policyholders must pay regular premiums to keep their policies active.
Bonuses: PLI policies may offer bonuses, such as Simple Reversionary Bonus and Final Additional Bonus, which are declared periodically based on the performance of the PLI fund.
Nomination: Policyholders have the option to change the nominee.

Overall, Postal Life Insurance provides an affordable and reliable option with attractive features and benefits for eligible individuals in India.

Contents

Postal Life Insurance Loan Facility and Interest Rates
Benefits of Postal Life Insurance in India
6 Types of Postal Life Insurance Policies
Choosing the Right Postal Life Insurance
Factors Affecting Postal Life Insurance Interest Rate
PLI Interest Rate Calculator
Who is eligible to apply for PLI?
Life Insurance Options from ACKO
Wrapping it up
Frequently asked questions

Postal Life Insurance Loan Facility and Interest Rates

As mentioned, PLI allows the policyholder to take a short-term loan from the policy. This loan facility is, however, available only after 3 to 4 years after taking the policy (3 years in case of Endowment Assurance and 4 years in case of Whole Life Insurance). The interest rate for this loan is 10% per annum for 6 months. This means that the interest is paid every six months for the PLI loan facility.

Factors such as the state of the market, governmental regulations, and the performance of the insurance fund influence the interest rate.
PLI interest rates are regularly adjusted to ensure policyholders receive favourable premium returns and align with current economic trends.

Let us consider this example:

Rajesh, a 35-year-old government employee in India, purchased a PLI policy to protect his family's financial future. Opting for a Whole Life Insurance plan with a ₹20 lakh sum insured, Rajesh starts with a promising annual interest rate of 7.1%.

Rajesh patiently paid his premiums over time and saw his investment increase. After several years, due to market and economic volatility, the PLI interest rate rose to 7.5%. Rajesh profited from this increase in interest rates since his investment grew faster, and he received more returns than he had anticipated.

However, like all investments, Rajesh's PLI policy experiences fluctuations. The interest rate dips to 7.3% in subsequent years. Despite this decline, Rajesh was confident. He understands that while PLI rates can change, they remain competitive and are closely regulated by the government, offering him a sense of security.

After 15 years, Rajesh is 50 and has saved significant money due to his PLI coverage. Rajesh's family is financially secure because of his steady investment development and favourable PLI interest rates.

Benefits of Postal Life Insurance in India

In the Indian life insurance market, postal life insurance is the only life insurance that gives a higher return (bonus) with a low premium charged. Besides, PLI provides the following benefits as well.

Loan Facility: Policyholders may also avail of loan facilities against their PLI policies after a certain period.
Tax Benefits: Premiums paid towards these policies are eligible for tax benefits under Section 80C of the Income Tax Act. The death benefit is generally tax-exempt under Section 10(10D).
Policy Revival: PIL offers the ability to revive lapsed policies. (Policies lapse in case you failed to pay the premium 6 times in a row for a policy that existed for less than or equal to 3 years and 12 times in a row if it existed over 3 years)
Policy Bond Replacement: If the original policy bond has been lost or damaged, PIL offers the policyholder a duplicate policy bond.
Policy Conversion: You can convert certain policies to other policies—for example, Whole Life Assurance -Gram Suraksha to Endowment -Gram Santosh Assurance.

6 Types of Postal Life Insurance Policies

There are six types of PLI plans, each with a respective interest rate calculated using compound or bonus interest.

Whole Life Assurance (Suraksha)
Joint Life Assurance (Yugal Suraksha)
Convertible Whole Life Assurance (Suvidha)
Endowment Assurance (Santosh)
Anticipated Endowment Assurance (Sumangal)
Children Policy (Bal Jeevan Bima)

1. Whole Life Assurance (Suraksha)

In this scheme, the insured person will get the assured amount of money with the accrued bonus as they reach 80. If the insured person passes away before turning 80, their legal representative or assignees will receive the money and the bonus. This is true if only the policy is in force on the date of claim.

Minimum age 19, Maximum age 55.
Sum Assured ₹ 20,000 - ₹ 50 lakhs.
Loan facility after 4 years.
Surrender after 3 years.
Last declared bonus - ₹ 85/- per ₹ 1000 sum assured annually.

2. Endowment Assurance (Santosh)

In this scheme, the insured person will get the assured amount with the accrued bonus as they attain a certain predetermined age (for example:- 35, 40, 45, 50, 55, 60 etc.). If the insured person passes away before this predetermined age, their legal representative or assignees will receive the money and the bonus.

Minimum age 19, Maximum age 55.
Sum Assured ₹ 20,000 - ₹ 50 lakhs.
Loan facility after 3 years.
Surrender after 3 years.
Last declared bonus - ₹ 58/- per ₹ 1000 sum assured annually.

3. Convertible Whole Life Assurance (Suvidha)

This is a Whole Life Assurance Policy, which allows the policyholder to convert their policy to the Endowment Assurance Policy after 5 years of taking it. Here, the insured person will also get the assured amount with the accrued bonus as they attain a predetermined age. Or, in case the insured person passes away before this predetermined age, their legal representative or assignees will receive the money and the bonus.

Minimum age 19, Maximum age 50.
Sum Assured ₹ 20,000 - ₹ 50 lakhs.
Loan facility after 4 years.
Surrender after 3 years.
Last declared bonus - ₹ 85/- per ₹ 1000 sum assured per year (for WLA policy if not converted to Endowment Assurance).

4. Anticipated Endowment Assurance (Sumangal)

This is a money-back insurance policy. The insurance holder will receive monetary benefits at regular intervals. In case of the insurance holder's death, the legal representative or assignees will receive the total amount and any bonus accumulated. This policy can be of either a 15-year term or a 20-year term.

Minimum age 19 years and maximum age 40 years for a 20-year term policy.
Minimum age 19 and maximum age 45 years for a 15-year term policy.
If you choose a 15-year term, you will receive periodic benefits at the end of the 6th year, 9th year, 12th year and 15th year. This will be 20%, and on completion of the policy, you will receive 40% with an acquired bonus.
If you choose a 20-year term, you will receive periodic benefits at the end of the 8th year, 12th year, 16th year and 20th year. This will be 20%, and upon completion of the policy, you will receive 40% with an acquired bonus.
Last declared bonus - ₹ 53/- per ₹ 1000 sum assured per year.

5. Joint Life Assurance (Yugal Suraksha)

This policy is for married couples. Here, either spouse should be eligible for the Postal Insurance Policy (PLI). This policy will give lifetime cover for both spouses. The policyholders will receive the assured sum and acquired bonus upon the completion of the term, and in case of death, the assignees or the surviving spouse will receive the same.

Minimum age 21, Maximum age 45
Sum Assured ₹ 20,000 - ₹ 50 lakhs
Loan facility after 3 years.
Surrender after 3 years.
Last declared bonus - ₹ 58/- per ₹ 1000 sum assured per year (for WLA policy if not converted to Endowment Assurance).

6. Children Policy (Bal Jeevan Bima)

In this scheme, you can take a life insurance policy for your children. The policyholder can insure a maximum of two of their children.

The child should be between 5-20 years of age.
Policyholders or parents should not be over 45 years of age.
Sum Assured ₹ 3 lakhs or equal to the sum assured of the parent, whichever is less.
No premium would be paid if the policyholder (the parent) passes away. On completion of the term, the full sum shall be paid to the policyholder.
The policyholder (parent) shall pay the children's policy.
The last bonus rate is ₹ 58/- per ₹ 1000 sum assured annually.

Choosing the Right Postal Life Insurance

Consider the following factors when selecting the best postal life insurance coverage to meet your needs and financial objectives.

Evaluate Your Insurance Needs: Establish the reasons for your need for life insurance and the debts you need the policy to pay for. Consider things like retirement planning, kid education, debt payback, income replacement, and family protection.
Recognise Policy Types: Different aims are served by each type, such as offering lifetime coverage, guaranteed returns on savings, or funding for children's education.
Coverage Options: Consider sum assured and extra advantages like riders for critical illnesses or accidental death coverage.
Compare Benefits and Premiums: Examine premium costs for various PLI insurance. Seek plans that offer affordable premiums and enough coverage.

Factors Affecting Postal Life Insurance Interest Rate

Online tools like the PLI Interest Rate Calculator can quickly help calculate premiums and compare plans. However, the interest rate can change based on a few factors, as explained below.

Market Conditions: PLI interest rates are heavily influenced by the state of the economy, including inflation rates, central bank interest rates, and general market performance.
Government Policies: Because PLI is an insurance company supported by the government, modifications to laws and policies may impact interest rates. For example, government regulations pertaining to investment avenues, fund management procedures, and financial stability measures may impact PLI's capacity to provide competitive interest rates.
Bonus Declarations: Depending on the insurer's financial success, certain PLI policies may periodically declare bonus interest rates. These bonuses have the potential to increase policyholders' total interest income and support the expansion of their assets.

PLI Interest Rate Calculator

There are online tools to help the policyholder calculate the total premium amount payable towards the policy. These calculators also help compare various PLI plans to help you choose the best options. This premium amount will also include the GST, and the premium payable can be calculated for monthly, quarterly, half-yearly or annual time frames.

Who is eligible to apply for PLI?

You are eligible for PLI if you are employed in the following departments.

Central Government
State Government
Local Bodies
Defence Services
Paramilitary forces
Government-aided Educational Institutions
Public Sector Undertakings
Reserve Bank of India
Nationalised Banks
Financial Institutions
Employees of all the scheduled commercial banks
Autonomous Bodies
Extra Departmental Agents in the Department of Posts
Employees Engaged/ Appointed on a Contract basis by central/ state government where the contract is extendable.

Employees of Credit Co-operative Societies and other Co-operative Societies registered with the Government under the Co-operative Societies Act and partly or fully funded by the central/ state government/RBI/ SBI/ Nationalised Banks/ NABARD and other such institutions notified by Government.

Employees of deemed universities and educational institutes are accredited by recognised bodies such as the National Assessment and Accreditation Council, All India Council of Technical Education, Medical Council of India, etc.

Employees (teaching/non-teaching staff) of all private educational Institutions/schools/colleges affiliated to recognised Boards (recognised by Centre/State Government) of Secondary/Senior Secondary education, i.e. CBSE, ICSE, State Boards, Open Schools, etc.

Employees of listed companies of NSE (National Stock Exchange) and Bombay Stock Exchange (BSE) in IT, Banking & Finance, Healthcare/Pharma, Energy/Power, Telecom, Infrastructure Sector, etc, where employees are covered for Provident Fund/Gratuity and/or their leave records are maintained by the establishment.

Professionals such as Doctors (including Doctors pursuing Post Graduate degree courses through any Govt/Private Hospitals, Residents Doctors employed on a contract/permanent basis in any Govt/Private Hospitals, etc.), Engineers (including Engineers pursuing Master’s/Post Graduate degree after having passed GATE entrance test), Management Consultants, Chartered Accountants registered with Institute of Chartered Accountants of India, Architects, Lawyers registered with Bar Council of India/States, Bankers working in Nationalised Banks and its Associate Banks, Foreign Banks, Regional Rural Banks, scheduled commercial banks including Private Sector Banks etc.

Life Insurance Options from ACKO

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ACKO Life Flexi Term Plan: Key Benefits

Flexible Policy Term	Affordable Premiums
Customise Sum Assured	Will Creation Services
Add Riders	Adaptable Payout Options

With ACKO Life Flexi Term Plan, you can customise your protection to suit your changing needs. A list of riders available includes Critical Illness, Accidental Death, and Total Permanent Disability to enhance your protection easily!

Find the right plan-->

Wrapping it up

Postal Life Insurance gives customers financial stability and peace of mind with its affordable interest rates and easy application process. Its consistently competitive rates make it an attractive life insurance choice for employees of both central and state governments.

Frequently asked questions

Below are some of the frequently asked questions on Postal Life Insurance Interest Rates in India

Is Postal Life Insurance (PLI) better than others?

When compared to other life insurance in the market, PLI offers a cheaper premium. And that is the most appealing factor in selecting PLI over other life insurance policies. Also, the bonus rate offered by PLI is 7% or more. Whereas other life insurance policies have lesser bonus rates.

Can I buy Postal Life Insurance Online?

Yes. Even if you are not a customer of PLI already, you still can buy a policy online. Customer can buy Postal Life Insurance online by visiting the following URL: https://pli.indiapost.gov.in/CustomerPortal/Home.action

Which PLI Scheme is the best?

Postal Life Insurance offers 6 policies or schemes. They are as follows.

Whole Life Assurance (Suraksha)
Endowment Assurance (Santosh)
Convertible Whole Life Assurance (Suvidha)
Anticipated Endowment Assurance (Sumangal)
Joint Life Assurance (Yugal Suraksha)
Children Policy (Bal Jeevan Bima)

Please go through each and select the one that best suits your requirements. There are online tools to calculate the Interest Rate and the total premium amount payable towards the policy.

What is the interest rate in the Postal Life Insurance Scheme?

PLI provides the policyholder with the ability to take a short-term loan from the policy. The interest rate for this loan is 10% per annum for 6 months. This means that the interest is paid every six months for the PLI loan facility.

How to check the status of a Postal Life Insurance policy?

You can check the status of a Postal Life Insurance Policy by logging in to the Official Website - www.indiapost.gov.in. You need to log in with your registered email id and required credentials. After that, you can see the status of your life insurance policy.

Can I change the nominee of my PLI policy?

PLI policyholders are free to designate beneficiaries and amend them as necessary.

How can I calculate how much my PLI premium will be?

PLI policyholders can calculate the amount of their PLI premium by using online resources such as the PLI Interest Rate Calculator. These online tools calculate the overall premium amount by considering age, sum assured, and policy duration.

When will the PLI plan allow me to apply for a loan?

Loan facilities are available for endowment policies after three years of maturity and Whole Life Insurance policies after four years.

Is it possible to apply for a house loan using the PLI scheme?

No, housing loans cannot be used with India's PLI policies.

Which PLI plan is the best?

Because of its higher sum assured and many other benefits, Whole Life Assurance, also known as Suraksha Postal Life Insurance, is regarded as the best PLI.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.