8 min read
Updated on Jan 29, 2024
In India, we have several types of insurance, and it often becomes difficult to analyse which one to buy and how they are different from each other. One can also choose a government-aided life insurance plan from LIC or post offices.
But who is eligible to buy these policies, and what are the main features of a LIC and PLI plan? What is the PLI eligibility, and what are its interest rates, as compared to a LIC plan?
To get the right answers to all such queries and much more, we suggest you go through a detailed PLI vs LIC in this post. We will also talk about the different plans and features of LIC and PLI plans, so stay tuned!
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Launched in 1884, PLI is the oldest insurance option available to the government officials or those working in organizations associated with the government. The main benefit of buying Postal Life Insurance is that it offers high returns on minimum premiums. The main disadvantage of this policy is, as we mentioned earlier, that it is not available for everyone.
Listed below are some advantages of buying a PLI policy:
Now, let’s take a look at the PLI plans in detail:
This plan is similar to LIC’s whole life policy. Under this plan, the nominee receives a sum assured and accrued bonus in case of the demise of the policyholder during the policy term. The age at entry for this plan is a minimum of 19 years, while the maximum age at entry is 55 years. The investor can invest a minimum of INR 20, 000 under the PLI’s Suraksha plan and the maximum investment amount is INR 10, 00,000.
Like in other endowment policies, under the PLI Santosh Plan, the policyholder receives the sum assured and a bonus on surviving the plan till maturity. On the other hand, if the policyholder dies during the policy period, the nominee receives the entire amount of the sum assured and bonus. The criteria of eligibility under this plan are similar to those of the PLI’s Whole Life Assurance Policy (Suraksha plan).
This is a plan offered by PLI where the policyholder can share the account with his/her spouse as co-insured. To invest in the Yugal Suraksha plan, one of the insured must be eligible as per the plan’s eligibility criteria. The coverage received under this plan is the same for both spouses (which is up to the sum assured). INR 1, 00,000 is the maximum sum assured under this plan.
The Suvidha Plan by PLI is the same as the Endowment Assurance plan. However, if the policyholder under this plan doesn’t convert the PLI to an Endowment, it is considered a Whole Life Assurance plan for the policyholder.
Sumangal is an endowment money-back policy. Under this plan, the maximum sum assured is INR 5, 00,000. The Anticipated Endowment offers two PLI policies with different terms/tenure – a 15-year and a 20-year term.
Life Insurance plans from Life Insurance Corporation, LIC Ltd. are available for all Indian citizens and even NRIs. They offer high protection but at comparatively high premium rates. There are a plethora of plans offered by LIC for families and individuals.
Listed below are some advantages of buying a LIC plan:
Now, let’s take a look at the LIC plans in detail:
The Jeevan Amar plan from LIC is a pure protection term plan available with two options to avail death benefits by the nominee. They are increasing Sum Assured and Level Sum Assured. Being a non-linked and non-profit plan, the policy offers life protection at a reasonable premium price, while ensuring the financial security of the beneficiaries of the plan.
The premium of the plan is charged under two categories namely, smoker rates and non-smoker rates. Smokers are charged a higher premium as compared to non-smokers. Female applicants can also avail low premium rates under this plan. Single, Regular, and Limited are the different premium payment terms under the plan.
This is a combination plan where the insured gets protection and an income as an annual survival benefit after the end of the premium payment term until maturity. The policyholder receives an accumulated sum of money at maturity if he/she outlives the plan. However, in case of a sad demise of the policyholder during the policy term, the nominee of the plan receives the amount.
Jeevan Pragati is another life insurance plan from LIC. This policy is again a combination of savings and protection in the non-linked category. The sum assured of the plan increases once every five years. The policy is available for people in the 12 to 45 years age group. The term of the plan ranges from 12 to 20 years.
New Jeevan Nidhi is a conventional LIC pension plan available with profits. This is another combination plan where you get the features of protection as well as savings. The best thing about the policy is that it offers death benefits during the deferment period and the benefit of annuity on vesting. The plan comes with an accidental death rider and a disability benefit rider at an extra cost.
New Bima Bachat is a non-linked participating plan offering benefits of savings and protection. The plan requires the insured to pay the premium in lump-sum amounts while buying the policy. Bima Bachat is a money-back plan where the nominee of the policy receives a death benefit in case of the death of the insured during the policy term. However, it also has the provision of survival benefits at particular durations of the policy term if the policyholder outlives the plan. e
Have a look at a one-to-one PLI vs. LIC for a better understanding to make a right decision for yourself:
|Types of Plans Offered
|Only traditional life insurance plans are offered. No market-linked, term insurance, or retirement plans are offered
|All types of life insurance plans are offered, be it market-linked or traditional plans
|Eligibility to Buy
|Available only to employees of local bodies, Government organizations, educational institutions, defence and some listed companies
|Any Indian citizen and even an NRI can buy an LIC plan
|Option to Buy
|Can be bought only from a post office
|Can be bought from the company, through agents, and online
|Maximum Age to Apply
|Up to 55 years
|Up to 75 years
|Low and very affordable premiums. One can get a rebate of 2% by paying 12 months premium in advance
|Higher premium rates as compared to PLI
|Can be paid at the nearest post office branch or online and electronic modes
|Can be paid through an LIC branch, collection point, or online mode
|Coverage can’t be extended or customized
|Option to grab various optional riders that can be customized
|Low as compared to PLIs
Have a look at the different plans offered by PLIs:
|Whole Life Insurance or Suraksha Plan
|Endowment Insurance or Santosh Plan
|Joint Life Assurance or Yugal Suraksha Plan
|Convertible Whole Life Insurance or Suvidha Plan
|Anticipated Endowment Plan or Sumangal Plan
Have a look at the different plans offered by LIC:
|Jeevan Amar Plan
|Jeevan Umang Plan
|Jeevan Pragati Plan
|New Jeevan Nidhi Plan
|New Bima Bachat Plan
Those who are eligible must opt for a PLI rather than a LIC plan because it gives more returns on less premium and other high bonus benefits. But, if you are not a government employee or are not eligible to buy postal life insurance, research well about the different LIC plans and buy one that suits your needs and offers the best sum assured and maximum benefits.
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There are several PLI schemes, and the best 5 are listed below:
~ Whole Life Assurance or Gram Suraksha
~ Children Policy or Bal Jeevan Bima
~ Endowment Assurance or Gram Santosh
~ 10 Years Rural PLI
~ Anticipated Endowment Assurance or Gram Sumangal
The maturity benefits earned as income from a Postal Life Insurance will be tax-free. However, this tax benefit can be fetched only if the sum assured is 10 times the annual premium paid for the policy.
The maximum limit of the sum assured in a PLI is Rs. 3 Lakhs. If the PLI is for a child, then the maximum limit will be the amount of the sum assured for the parent.
A PLI policyholder can take a short-term loan against the policy at an interest rate of 10% per annum for 6 months. In other words, 10% interest is paid for a PLI policyholder every 6 months.
All the maturity amounts of any LIC policy apart from ULIP issued after April 1st, 2023 with an annual premium of over Rs. 5 Lakh are now taxable. This tax information about the LIC maturity was proposed in the Budget proposal 2023.
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