Many people get confused between Postal Life Insurance (PLI) and Life Insurance Corporation of India (LIC). Let’s understand the differences.
All Life Insurance policies not only help you protect the financial interests of your family in case of loss of income due to critical illness or death, they also help you get a tax exemption. Due to all these benefits and the option to get the policy customised according to your needs, many people opt for Life Insurance plans.
Postal Life Insurance (PLI)
It dates back to 1884, and was launched initially for the benefit of all the employees of the Postal Department. Back in the day, the upper limit for Postal Life Insurance was Rs. 4,000, but it has now increased to Rs. 50 lakh. Since then, Postal Life Insurance has grown substantially. It currently covers employees of the State and Central Government, Universities, State Public Sector Undertakings, local and autonomous bodies and a lot more!
Additional Reading: Who Else Wants to Know Their Rights as an Insurance Policy Holder?
Features of Postal Life Insurance Policy
By investing in Postal Life Insurance, a policyholder can avail the following benefits:
- Nomination facility: The policyholder can nominate his/her beneficiary, and can also make changes to the nomination.
- Loan facility: Loan facility is available against this policy. The policyholder can pledge his/her policy as a collateral to the Heads of the Region/ Circle on behalf of the President of India. This can be done once the policy has attained 3 years maturity in case of an Endownment Assurance policy and 4 years policy period has been completed in the case of a Whole Life Insurance policy. Assignment facility is also available under this scheme.
- Policy Revival: A policyholder can revive a lapsed policy. The policy can be revived if lapsed under the following conditions –
- Policy has lapsed after 6 successive non-payment of premium with the policy being in effect for less than 3 years.
- Policy has lapsed after 12 successive non-payment of premium where policy has been in effect for more than 3 years.
- Duplicate Policy Document: A duplicate policy document will be issued to the policyholder if he/she has lost the original document. This also applies to the case where the original policy document is mutilated, burned or torn and the insured wants a duplicate of the same.
- Conversion of Policy: This policy can be converted from a Whole Life Assurance policy to an Endowment Assurance Policy. An Endowment Assurance Policy can be converted to another Endowment Assurance plan as per the regulations and guidelines laid down by the insurer.
Benefits of Investing in Postal Life Insurance Policy
Some of the benefits and discounts offered under the Postal Life Insurance scheme are as follows:
- The insured can avail income tax exemption as provided under Sec. 88 of the Income Tax Act
- The premium payable for the sum assured and coverage is much lower than that payable under any other life insurance policy
- The policy can be transferred to any circle within India, at no additional charges
- Passbook facility is available to track the payment of premium and in case of loan transactions, etc
- Premium can be paid on an annual, half-yearly and monthly basis. When the payment is due, the policyholder can make a payment on any working day
- If you make an advance premium payment for a policy period of 6 months, you can avail a discount on premium worth 1% of the value
- If you make an advance premium payment for a policy period of 12 months, you can avail a discount on premium worth 2% of the value
- Nomination facility is available
- Since this scheme has a centralised accounting facility, the claims process is quick and easy
Life Insurance Corporation of India (LIC)
After passing the Life Insurance of India Act in 1956, LIC was created to make the concept of Life Insurance much more popular in the country. The main aim was to encourage more rural people to get themselves insured so that they could avail of a financial cover at a reasonable cost. LIC started with 5 zonal, 33 divisional and 212 branch offices, and has today grown to almost 2050 fully computerized branch offices, 113 divisional, 1381 satellite, and 8 zonal offices.
Benefits of LIC
- Good Network:LIC has been the leader as an insurance provider for a long time. It also has a strong network of over 2000 branch offices and 156 satellite branches.
- Partnership: The company does not work alone but partners with insurance and financial tycoons including NSE, LIC Mutual Fund, NCDEX, Stock Holding Corporation of India, Insurance institute of India and National insurance Academy among many similar organisations.
- International Branches: LIC has fully functional offices in countries such as Nepal, Sri Lanka, Saudi Arabia and Bahrain.
- Product Variety: LIC offers a big bouquet of policies available under the banner of Life Insurance alone. It has the largest portfolios when it comes to Life Insurance group schemes.
- Innovation: Launches new products at regular intervals that are designed to meet the needs of people from all sections of the society.
- Good Stock Market Performance: When it comes to stock market positioning, LIC stocks are one of the most stable stocks available in the Bombay Stock Exchange.
Now that you know a bit about the history of both PLI and LIC, let’s look at the main differences between the two:
Postal Life Insurance (PLI)
Life Insurance Corporation of India (LIC)
|1. It’s a Life Insurance plan offered by the Post Office.||1. The Life Insurance Corporation of India, which is a Public Sector Undertaking (PSU), offers a series of Life Insurance plans and continues to dominate the Indian Life Insurance market.|
|2. To apply for PLI, you need to be a State or Central Government employee, or need to be a part of a University, Government-aided institution, local body, nationalized bank, State, and Central Public Sector Undertaking or a part of Indian Para-military services or defence services.||2. Any Indian citizen can apply for any Life Insurance policy offered by the LIC.|
|3. PLI doesn’t offer Term Insurance plans.||3. LIC offers Term Insurance plans.|
|4. The biggest advantage of opting for PLI is – cheaper premiums.||4. The premiums offered by LIC are higher compared to PLI.|
|5. The rate of bonus that you can avail on a PLI is above 7%.||5. The current (2015) bonus rate offered by LIC is around 4-5%|
|6. Since you don’t have an option of calling the PLI agent home, you need to visit the Post Office to check the schemes being offered.||6. If you want to get an LIC policy, all you need to do is make a phone call and their agent will come to your place.|
|7. PLI covers people in the age group of 19-55 years.
|7. The age group varies for different LIC policies and even extends up to 75 years in some cases.|
|8. The maximum sum assured for Postal Life Insurance extends up to Rs. 50 lakh.||8. LIC lets you avail of an unlimited maximum sum assured.|
|9. To pay your premium, you need to visit the PLI office.||9. LIC offers you options to pay at the branch offices, through collection points and you can even pay online.|
If you need any more information about managing your finances better, we’ll always here to help. Promise!Now that you know the main differences between the two, you can compare them and see which one suits you better. We simplified it for you, didn’t we? Yay!