Postal Life
Insurance Vs LIC-Which is best?
Do you know your Post Office also offers Life Insurance? Even if
you know then there is a huge confusion among buyers like whether to buy with
the Post Office or with LIC, because the Government of India backs both. Hence,
let us see which is best for whom.
What is PLI (Postal Life Insurance)?
PLI (Postal Life Insurance) is exactly like any Life Insurance
company, for example LIC or ICICI Pru Life Insurance. The only difference is,
it is run and managed by Post Office. PLI currently offers only traditional
plans. Therefore, no term insurance or ULIPs.
How many types of policies PLI (Postal Life
Insurance) offers?
Currently PLI offers below mentioned traditional endowment
products.
1) Whole Life Assurance Policy (Suraksha).
This is exactly like LIC’s Whole Life Policy. The nominee will
receive the accrued bonus and sum assured after the death of the policyholder.
Minimum age at entry is 19 Yrs and maximum is 55 Yrs. Minimum Sum assured is
Rs.20, 000 and maximum Sum Assured is Rs.10, 00,000.
2) Endowment Assurance (Santosh).
This is a typical endowment plan where a policyholder gets sum
assured along with bonus if he survive until the maturity period. In case of
his death during the policy period, then his nominee will receive the sum
assured along with accrued bonus. Eligibility criteria are same as that of
Whole Life Assurance Policy (Suraksha).
3) Convertible Whole Life Assurance (Suvidha).
This plan is exactly like Endowment Assurance. The only
difference is, if you don’t convert this policy to Endowment Assurance then it
is treated as Whole Life Assurance plan.
4) Anticipated Endowment Assurance (Santosh).
This is typical money back endowment plan, where the maximum sum
assured is restricted to Rs.5, 00,000. In this category, PLI offers two types
of plans. One is 15 yrs and other is a 20 yr term.
5) Joint Life Assurance (Yugal Suraksha).
You can buy this policy with your spouse as co-insured. To avail
this facility one the spouse must be eligible to buy PLI. Life Insurance
coverage is for both husband and wife to the sum assured you bought. The
maximum sum assured is Rs.1, 00,000.
6) Scheme for physically handicapped persons.
This plan is uniquely designed for handicapped persons. Based on
the condition of handicap, premium raised or increased. Rest of plan features
are exactly like the others.
7) Children Policy
PLI started to offer child policy from 2006. Few features are
listed below.
- It mainly
covers the life insurance of children.
- Maximum two
children can be insured in a family.
- Children
between 5 Yrs to 20 Yrs are eligible for this plan.
- Maximum Sum
Assured is Rs.1,00,000.
- Premium
waiver benefit in case of main policy holder dies.
- In case of
death of children, then sum assured along with bonus be payable to main
policy holder.
- Responsibility
of premium payment rest with main policy holder.
So what is the difference between PLI and LIC?
- Eligibility-To buy PLI you must be employee of
the Central and State Governments, Central and State Public Sector
Undertakings, Universities, Government aided Educational institutions,
Nationalized Banks, Local bodies, etc. PLI also extends the facility of
insurance to the officers and staff of the Defense services and
Para-Military forces. Where as LIC offers it’s plans to all citizens of
India. So when it comes to flexibility to buy then LIC holds edge than
PLI.
- Plans
offered-There
is no such difference. Because LIC and PLI mostly dependent on traditional
endowment type of Life Insurance Plans. But along with that LIC
offers term insurance (recently LIC
launched online term insurance), which is not at all touched by PLI.
- Premium
Rate-When
compare to LIC or any private insurers, PLI offers cheap premium. So this
is a most advantage of buying endowment plans with PLI than with LIC.
- Bonus
Rate-Bonus
offered by PLI is in the range of 7% or more. Whereas currentlyLIC
offers a bonus rate of around 4% to 5%.
- Where
to buy-In case
of PLI, you have to visit to the Post Office where these schemes are offered.
Whereas in case of LIC, you will easily get agents. These agents can come
to your doorstep and offer the service. Along with that recently LIC
launched an online buying also (restricted to online term plan and pension
plan). Therefore, in case of buying LIC offers more flexibility than PLI.
- Age
Limit-PLI
offers insurance to the age group of 19-55 yrs. Where as in LIC you
can get the insurance coverage up to 75 yrs (not in all policies).
- Maximum
Sum Assured-PLI
offers you the maximum sum assured of Rs.50 Lakh. Whereas, LIC offers an
unlimited maximum sum assured.
- Premium
Payment-You
need to visit the Post Office to pay the premium dues. However, in case of LIC,
you can pay it in branch, collection points or through online.
- Tax
benefits-Both PLI
and LIC offer same tax benefit for deduction under Sec.80C.
Considering all these features and differentiation between PLI
and LIC, I feel PLI is still in olden days. Because it offers less insurance
coverage, entry is restricted to only few, service issues, no term insurance
and age limit. Whereas only two positive points that attract you towards PLI
are lesser premium and higher bonus.
Whether it is prudent to buy endowment plans from
PLI?
Even though PLI offers you higher return and lower premium
compare to LIC and other private insurers, the returns in the long run may
erode drastically if you consider the inflation. Along with that, you will be
under insured due to restricted maximum insurance limit. Post Offices still not
customer friendly. So you may face service issues and claim settlement issues.(now
improved)
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