Postal life insurance (PLI) Tax Benefits

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Postal Life Insurance or PLI is among the oldest insurance providers in India offering high returns on investment. Let us learn about the advantages of the PLI tax benefits in India in this post.

Postal Life Insurance offers products ranging from Whole life insurance plans, endowment plans, and child plans among others. The PLI tax exemptions is the most striking feature of these products. The tax benefits received under PLIs attract more and more people to purchase postal life insurances to insure lives and secure families.

In this post, we are discussing the postal life insurance incentives including tax benefits associated with PLIs in India.

About Postal Life Insurance (PLI) Scheme

Postal Life Insurance or PLI is a life insurance policy with high return on premium. The Policy allows a sum assured of INR 50 lakh maximum to policyholders. Introduced in 1884 as a welfare scheme, postal life insurance is one of the oldest life insurance providers in India.

With policies offered to over 50,00,000 consumers,  PLI is regarded as a trustworthy personal investment scheme offering high returns and bonus at very low premium rates.

Tax Benefits of Postal Life Insurance (PLI) Policies

You may have a query – PLI comes under which section of income tax? So, PLIs allow significant amount of savings on tax as these policies offer tax exemptions under the following Income Tax sections:

PLI Under section 80C

  • Section 80C of Income Tax Act of India offers deductions on the premium paid towards a life insurance policy. A maximum deduction of INR 1.5 lakh is allowed under this section
  • However, if a policy is bought on or before 31st March 2012, the tax deduction can be availed up to 20% of the sum assured
  • On the other hand, if a policy is issued after 31st March 2012, tax benefits is limited to 10% of the sum assured  under section 80C
  • The benefits in this category can be availed for PLI policies that are purchased for a taxpayer or his/her spouse and kids

PLI Under Section 10(10D) 

Section 10(10D) of Income Tax also allows tax deductions on the sum received at the time of maturity of the policy. However, there are certain conditions as mentioned below:

  • In case of PLI policies that were bought between April 1, 2003 and March 31, 2012, the premium paid per year should be 20% of sum assured to avail tax deductions
  • In case of PLI policies purchased after March 31, 2012, the premium paid per year should be 10% or less of the sum assured to receive the tax benefits
  • Also, if the sum assured amount is 10% of the annual premium paid, the maturity benefit will be tax -free
  • Further, section 10(10D) also exempt a policyholder from paying tax on bonuses as well as surrender benefits under PLIs
  • It is important to note that if the maturity proceeds of PLIs exceed INR 1,00,000, a deduction of 1% TDS is done under Income Tax Act of India

Postal Life Insurance (PLI) Death Benefit

In case of sum assured received as death benefit by the nominee of the policyholder, the amount is regarded as tax free under India’s Income Tax Act.

Postal Life Insurance (PLI) – Benefits

PLI schemes allow numerous benefits to their policyholders and are regarded as one of the most flexible policies. Thus, it is also the most sought after policy in India. Here are some benefits that a PLI policyholder can receive:

  • PLI allow the name of nomination to be changed at any given time by the insured
  • PLI also make it easy to avail duplicate policy bonds to the insured if the original gets lost, mutilated, burnt, or torn
  • If a policyholder couldn’t pay PLI premium for six months after the plan turns three years, it is possible to revive the lapsed policy after six months. Similarly, if the policy is more than three year old, it is still possible to revive it after 12 months of the plan being lapsed
  • PLI allow an insured to avail loan if the policy is over three years old (Endowment Assurance) or if the policy is four years old (Whole Life Assurance)
  • Further, with PLI the policyholder can switch a Whole Life Assurance plan to an Endowment policy. Also one can convert from one Endowment plan to other Endowment plans based on some conditions

Eligibility Criteria Under Postal Life Insurance

To apply for postal life insurance policies, you need to fulfill the below eligibility criteria:

  • A permanent or temporary employee of a self-governing body created by the government under specified rules is eligible
  • All employees of central and state government (permanent and temporary) are eligible
  • Defence officials including employees under short service and extended service commissions as well as non-permanent commissions are eligible
  • Employees of post and telecom dept. whose payment is structured as per central rules are eligible
  • Employees including permanent and temporary of India’s Dental Council, Pharmacy Council, Nursing Council, and Medical Council as well as the Council of Scientific and Industrial Research are eligible

Top 6 PLI Plans/Schemes You can Choose for 2024

Plan Name Eligibility Minimum Sum Assured Maximum Sum Assured Loan Facility Premium Amount
Whole Life Insurance (Suraksha) 19 years (Min)

 

55 years (Max)

INR 20,000 INR 50,00,000 Available after four years of policy completion Varies depending on factors like entry and maturity age of insured and other factors
Endowment Assurance (Santosh) 19 years (Min)

 

50 years (Max)

INR 20,000 INR 50,00,000 Available after four years of policy completion Varies as per various factors
Convertible Whole Life Insurance (Suvidha) 19 years (Min)

 

55 years (Max)

INR 20,000 INR 50,00,000 Available after three years of policy completion Varies as per various factors
Anticipated Endowment Assurance (Sumangal) 19 years (Min)

 

45 years (Max)

INR 20,000 INR 50,00,000 Not Available Varies as per various factors
Joint Life Endowment Assurance (Yugal Suraksha) 19 years (Min)

 

55 years (Max)

INR 20,000 INR 50,00,000 Available after three years of policy completion Varies as per different factors
Children Policy (Bal Jeevan Bima)

 

5 years (Min)

20 years (Max)

INR 20,000 INR 3 lakh Not Available Minimal

Minimal

Read More: What is the Postal Life Insurance (PLI) Interest Rate on Loans?

Policy Bonus on Postal Life Insurance (PLI) Policies for Financial Year 2024

Insurance Policies  Bonus Rate
Whole Life Assurance (WLA) INR 76/1000 of SI
Convertible Whole Life Assurance (CWLA) A whole-life bonus rate will apply, but on conversion, the Endowment Assurance bonus rate will apply
Endowment Assurance (EA)- (Joint Life and children’s policies) INR.52/1000 of SI
Terminal Bonus INR 20 per SI of INR 10,000 subject to a maximum of INR 1000 for Endowment and Whole life assurance policies for a term of 20 or more years
Anticipated Endowment Assurance (AEA) INR 48/1000 of SI

Note: The rates are applicable for 1 April 2023 for the bonus for FY 2024 for PLI policyholders.

How to Check the Status of a Postal Life Insurance Policy?

Below are the steps to check the status of your PLI policy in India:

  • First, go to the official portal of India Post
  • On the homepage, click on the tab of ‘Insurance’
  • Next, log on to your PLI account
  • Submit the policy number of your PLI and other details like DOB, registered mobile number, etc., and click on the ‘Submit’ button
  • You can see the details of the status of your PLI policy on the screen that appears

How to Claim the Maturity Amount of the Postal Life Insurance Policy?

Here are the steps to follow to claim the Postal Life Insurance (PLI) after maturity:

  • Visit your nearest post office (where you have purchased the PLI policy) and intimate the concerned official about your policy maturity
  • Get the necessary form from the post office and fill it out with precision
  • Once done, submit the form to the post office together with the necessary documents like ID documents and original policy papers
  • The claim will proceed ahead and will go through verifications. You may require additional documents too
  • Once the claim is approved, the applicant will receive the maturity benefit in his/her bank account or through a cheque

To Sum UP

PLIs can be availed by the employees of Government and Semi-Government organizations only. PLIs also offers policyholders high bonuses and returns at reasonably-priced premiums.

Insurance is a requirement for everyone. It secures your family and children if any misfortune strikes. However, while buying an insurance policy, it is very important to compare and understand the plan well before making the final buying decision.

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FAQs on Postal life insurance (PLI) tax benefits

Is postal life insurance for everyone?

PLIs can be availed by anyone who is an employee of the specified governments, armed forces, institutions and organizations etc. within the age group of 19 to 55 years. 

Is postal life insurance under IRDA?

PLI isn’t an ‘insurer’ so it cannot register itself with the Insurance Regulatory and Development Authority of India (IRDA). 

Is PLI for government employees?

Yes, PLIs can be availed only by Government and Semi-Government employees.

PLI comes under which section of income tax?

Income tax rebates on PLI are available under the section 80C of Income Tax Act. It is also available under section 10(10D) for the PLI maturity amount depending on certain conditions.

 

Can a private employee buy PLI?

No, Private employees cannot avail a PLI policy. It is available for employees of government and semi-government organizations only.

Is postal life insurance better than LIC?

The Premium Rate offered under a PLI is very less as compared to LIC or any other public, private insurers.

PLI maturity amount taxable or not?

Depending on certain conditions, PLI maturity amount can have tax deductions under section 10(10D) of Income Tax Act. 

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Dec 19, 2022
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PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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