Postal Life Insurance (PLI), a
125-year-old life insurance scheme run by the department of posts, is a good
option for people eligible for it as it charges lower premiums and offers
higher returns than comparable policies of life insurers. The policy, started
in 1884 for the employees of Posts & Telegraphs Department, has since been
extended to cover all central and state government employees and those working
in state run companies, or about 70% of organised sector employees in the
country. In 1995, the department launched Rural Postal Life Insurance to take
the benefits to all villagers who account for 60% of India's population. It
offers better returns than other comparable products. For example, Postal Life
Insurance has announced a bonus of Rs 65 per Rs 1,000 sum assured on its
endowment policy – where the insured gets the sum assured plus annual bonuses
when the policy period is over – irrespective of maturity since 2003.
Let's take the example of a 30-year
old government employee. If he buys PLI's endowment policy called Santosh for
risk cover of Rs 1 lakh for a period of 20 years, he will be paying a premium
of Rs 395 every month. For a similar policy offered by LIC, the Endowment Assurance
Plan, the monthly premium is Rs 442.At the time of maturity, after 20 years, he
will receive a total of Rs 2, 30,000 at the current bonus rate of Rs 65 per Rs
1,000 sum assured. His net earnings, if subtracted total premium paid during
the policy, will be Rs 1, 34,000.In the case of LIC Endowment Assurance Policy,
the proceeds could be Rs 2,04,000 (sum assured + accrued bonus + terminal
bonus) at the current bonus rates. The rate of reversionary bonus is Rs 42 per
Rs 1,000 sum assured, while terminal bonus is Rs 200 per Rs 1,000 sum assured.
Thus, the net earnings in the LIC scheme will be much lower at Rs 98,000.The
next obvious question is its tax treatment. Investment in PLI gets all tax
benefits any life policy is entitled for.
PLI is giving higher return than Post
Office recurring deposit (RD). e.g. if 25 year old government employee buys EA-35
for sum assured of 1 lakh, he will receive 1,65,000 after 10 years in PLI whereas
in Post Office RD total amount of maturity after 10 years on the same
denomination will be Rs.1,56,788/-.that gives return @ 8.4%. Thus PLI is better
option than even RD
A policyholder can pay the premium at
any 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. Postal Life Insurance, however, is not for investors who are
looking for new-age products like unit-linked insurance policies (ULIPs) and
pension plans. The postal department offers six plainvanilla 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. These policies just offer
death cover while LIC and other insurance companies offer accidental death
benefit with extra premiums. So, 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.
For
details you are free to contact Dy. Divisional Manager (PLI) GPO Building
Sector 17 Chandigarh Phone No.-2702231
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