PLI vs LIC – Compare Postal Life Insurance and LIC Policy Benefits, Features, and Plans


5 min read

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!

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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:

  1. Option to fix a nominee
  2. High bonus rate as compared to other insurance companies
  3. Tax benefits under Income Tax Act Section 80C
  4. High returns on low premium rates
  5. Option to pay a 12-month or 6-month premium in advance to get a 2% and 1% rebate
  6. 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:

  1. High Claim Settlement Ratio or CSR as compared to other insurance companies in India
  2. Easy loan facilities after 3-years for policyholders
  3. Option to get additional benefits like critical illness, accidental death, and disability
  4. The minimum sum assured limit is Rs. 1.5 Lakhs, but there is no limit for the maximum sum assured
  5. 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
  • Entry Age: 19 years
  • Sum Assured: Rs. 20,000 – Rs. 10 Lakhs
  • Death Benefit
  • Maturity with Bonus
  • Tax Benefit
Endowment Insurance or Santosh Plan
  • Entry Age: 19 years
  • Sum Assured: Rs. 20,000 – Rs. 50,000
  • Death Benefit
  • Maturity with Bonus
Joint Life Assurance or Yugal Suraksha Plan
  • Entry Age: 19 years
  • Sum Assured: Rs. 20,000 – Rs. 50 Lakhs
  • Policy for Married Couples
  • Term Policy for 5 to 20 years
  • Tax Benefits
  • Maturity with Bonus
  • Death Benefit
  • Beneficial for people living in Rural Area 36
Convertible Whole Life Insurance or Suvidha Plan
  • Entry Age: 19 years
  • Sum Assured: Rs. 20,000 – Rs. 50 Lakhs
  • Convertible into Endowment Plan after 5 Years
  • Tax Benefits
  • Death Benefit
  • Maturity with Bonus
Anticipated Endowment Plan or Sumangal Plan
  • Entry Age: 15 years
  • Maximum Sum Assured: Rs. 50 Lakhs
  • Money-back Insurance
  • Maturity with Bonus
  • Death Benefit
  • Tax Benefit

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Different Plans Offered by LIC

Have a look at the different plans offered by LIC:

LIC Plan Features Benefit
Jeevan Amar Plan
  • Entry Age: 18 years
  • Sum Assured: Rs. 25,000
  • Term Insurance Plan
  • Maturity Benefit
  • Surrender Benefit
  • Death Benefit
  • Tax Benefit
  • Other Optional Benefits
Jeevan Umang Plan
  • Entry Age: 90 days
  • Sum Assured: Rs. 20,000
  • Whole Life Insurance Plan
  • Maturity Benefit
  • Tax Benefit
  • Death Benefit
  • Surrender Benefit
  • Other Optional Benefits
Jeevan Pragati Plan
  • Entry Age: 12 years
  • Sum Assured: Rs. 1.5 Lakh
  • Endowment Plan
  • Maturity Benefit
  • Surrender Benefit
  • Tax Benefit
  • Death Benefit
New Jeevan Nidhi Plan
  • Entry Age: 20 years
  • Sum Assured: Rs. 1 Lakh – 1.5 Lakh
  • Pension Plan
  • Maturity Benefit
  • Surrender Benefit
  • Tax Benefit
  • Death Benefit
New Bima Bachat Plan
  • Entry Age: 15 years
  • Sum Assured: Rs. 35,000 – Rs. 70,000
  • Money-back Insurance
  • Maturity Benefit
  • Surrender Benefit
  • Tax Benefit
  • Death Benefit

Popular Life Insurance Companies India, 2023

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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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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May 28, 2023
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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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