PLI vs LIC – Compare Postal Life Insurance and LIC Policy Benefits, Features, and Plans
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Updated on Aug 11, 2023
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!
What’s Inside
PLI or Postal Life Insurance Policy
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.
Benefits of PLI
Listed below are some advantages of buying a PLI:
- Option to fix a nominee
- High bonus rate as compared to other insurance companies
- Tax benefits under Income Tax Act Section 80C
- High returns on low premium rates
- Option to pay a 12-month or 6-month premium in advance to get a 2% and 1% rebate
- Easy loan availability during emergencies
LIC Life Insurance Policy
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.
Benefits of LIC Life Insurance
Listed below are some advantages of buying a LIC plan:
- High Claim Settlement Ratio or CSR as compared to other insurance companies in India
- Easy loan facilities after 3-years for policyholders
- Option to get additional benefits like critical illness, accidental death, and disability
- The minimum sum assured limit is Rs. 1.5 Lakhs, but there is no limit for the maximum sum assured
- 24×7 customer support
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PLI vs LIC – Comparison Between PLI and LIC Plans
Have a look at a one-to-one PLI vs. LIC for a better understanding to make a right decision for yourself:
| Comparison | PLI | LIC |
| 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 |
| Premium Rate | 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 |
| Premium Payment | 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 Limit | Coverage can’t be extended or customized | Option to grab various optional riders that can be customized |
| Bonus | Very high | Low as compared to PLIs |
Different Plans Offered by Postal Life Insurance (PLI)
Have a look at the different plans offered by PLIs:
| PLI Plan | Features | Benefit |
| 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 |
|
|
Different Plans Offered by LIC
Have a look at the different plans offered by LIC:
| LIC Plan | Features | Benefit |
| Jeevan Amar Plan |
|
|
| Jeevan Umang Plan |
|
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| Jeevan Pragati Plan |
|
|
| New Jeevan Nidhi Plan |
|
|
| New Bima Bachat Plan |
|
|
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Conclusion
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.
Related Articles
- Life Insurance Underwriting
- Loan Against Life Insurance Policy
- Life Insurance Glossary A to Z You Should Know
- Top 8 Life Insurance Myths in India and Facts
- How to Cancel Life Insurance Policy During Free-Look Period and Get a Refund?
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FAQs: Postal Life Insurance vs LIC Policy Which is Best
Which postal life insurance scheme is the best?
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
Is PLI maturity tax-free?
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.
What is the maximum PLI limit?
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.
What is a PLI interest rate?
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.
Is the maturity amount of LIC taxable?
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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