PLI vs LIC Which is Best?- Benefits, Features, and Plans


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?

PLI vs LIC (Postal Life Insurance vs. LIC)

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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What is Postal Life Insurance (PLI) 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 Scheme

Listed below are some advantages of buying a PLI policy:

  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

Now, let’s take a look at the PLI plans in detail:

Postal Life Insurance (PLI) Plans

1. Whole Life Insurance or Suraksha Plan

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.

2. Endowment Insurance or Santosh Plan

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).

3. Joint Life Assurance or Yugal 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.

4. Convertible Whole Life Insurance or Suvidha 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.

5. Anticipated Endowment Plan or Sumangal Plan

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.

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

Now, let’s take a look at the LIC plans in detail:

LIC (Life Insurance Corporation) Plans

1. LIC Jeevan Amar Plan

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. 

2. LIC Jeevan Umang 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.

3. LIC Jeevan Pragati Plan

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.

4. LIC New Jeevan Nidhi Plan

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.

5. LIC New Bima Bachat Plan

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

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

ULIP Plan from PayBima

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, 2024

PLI vs LIC Which is Best?

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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