Postal Life Insurance Interest Rate on Loans


5 min read

Updated on Jan 30, 2024

All about Postal Life Insurance (PLI) and the PLI interest rate at which it allows loan facility to its policyholders.

The Government of India issues several financial plans every year to benefit its employees. Term life insurance is one of the most important of such financial products. With a view to providing financial protection to the employees of the Indian Post Office, Postal Life Insurance (PLI) was initiated. The scheme was slowly expanded to cover other Central Government employees and to offer insurance benefits to their respective families. In addition, PLI offers the extended benefit of loan facility to its employees at a decent interest rate.

Here we look into more details on PLI and the interest rate it offers on loans to its policyholders. Read on.

What is the Postal Life Insurance Scheme?

The PLI scheme was initiated by the government of India to offer life insurance protection to the employees of the Indian Post Office as well as other government and semi-government employees and professionals associated with the Indian government.

Life insurance benefits are made available under this scheme in addition to a loan facility against the sum assured. The loan facility provided under the PLI is provided against a percentage of the insured sum amount offered under life insurance. This loan helps the policyholder take care of any emergencies in the short term.

Also Read: How to check LIC policy status without registration

Postal Life Insurance (PLI) Plan Details

Here are some of the key features offered by PLI plans:

  • A total of 6 plans are available under PLI and Rural PLI insurance schemes.
  • The plans are extremely affordable for the benefit of its policyholders.
  • The sum assured is relatively higher than other plans and the premium charged is quite low.
  • Children are also covered under PLI and RPLI plans.
  • The upper limit of a life insurance plan under PLI has increased from Rs. 4,000 at the time of scheme initiation to Rs. 10,00,000 now.
  • PLI offers smooth and hassle-free claim settlement for all types of claims.
  • A bonus is also provided to the policyholder over the base sum assured guaranteed under the policy.

Also Read: Term insurance without medical

Rural Postal Life Insurance (RPLI)

Rural Postal Life Insurance, popularly referred to as RPLI, was a scheme initiated by the Indian Postal Department in 1995. The scheme was the government’s way of providing life insurance protection to the rural parts of the country where life insurance benefits haven’t reached adequately.

The scheme was introduced keeping in mind the extensive reach of post offices in rural areas through which reaching out to people with insurance would be easier.

Postal Life Insurance (PLI) Interest Rate 2024

The PLI scheme introduced for government employees also provides the special benefit of loan facility to help policyholders take care of short-term financial contingencies. However, the loan facility is available to the policyholder only after 3-4 years of buying the policy.

This loan amount can be availed at an interest rate of 10% p.a. for a period of 6 months. This means that the postal PLI interest rate on the loan amount is paid every 6 months. In case of failure in timely payment of interest by the policyholder, the pending interest amount gets added on to the outstanding loan. Also, the PLI rate of interest will then depend on the total outstanding loan.

In case of an untimely payment of PLI loan interest rate by the policyholder 3 times in succession, the PLI scheme for the policyholder will be surrendered by the insurer. The surrender value of the plan will then be used by the insurer to pay off all pending interest amounts as well as the outstanding loan amount. The policyholder would not be entitled to any benefits from the PLI scheme after the plan’s surrender.

Also Read: Postal life insurance tax benefit

PLI Interest Rate Calculator 2024

The interest rate calculator for PLI is designed to assist the policyholder in computing the total premium amount payable towards the policy. The premium amount generated by the PLI interest rate calculator includes the current rate of GST payable as well. Besides this, the premium payable can be computed for monthly, quarterly, half-yearly, or annually on the calculator. This can be done by entering details such as the age of the policyholder, the total sum assured under the plan, and the term of the policy.

Also Read: PLI surrender value calculator

Who is Eligible to Avail Loan Under PLI Scheme?

PLI offers loan facility to its policyholders under the following eligibility conditions:

  • A total of two loans can be availed by the policyholder. The decision in this case lies entirely with the insurer.
  • To apply for a loan against endowment and joint life insurance, the policyholder must have completed a minimum of 3 years of plan purchase.
  • Loan against whole life and convertible whole life assurance can be availed only after a minimum period of 4 years.
  • The PLI loan can be availed up to a maximum of a predetermined part of the surrender value determined at the time of policy purchase. The total amount of loan availed must not be lower than Rs. 1,000.

Read More: PLI Calculator

Benefits of Availing Loan Under PLI Insurance Scheme

Here are some of the prime advantages of taking loan against PLI:

  • Since one already is covered under PLI insurance scheme, it becomes easier for them to avail the loan facility offered under the scheme as against applying for loan elsewhere.
  • The interest rate offered on the loan under PLI is extremely affordable compared to other lenders. This is because PLI and RPLI schemes are targeted at the economically weaker sections of the society.
  • The entire loan-availing process is rather simple and hassle-free for the policyholder.
  • The loan can be utilized to manage any short-term financial shortages.

Popular Life Insurance Companies India, 2024

Summing Up

PLI loan facility is one of the major highlights of the insurance plan, helping government employees and professionals to take care of their financial needs adequately. The interest rate is fairly decent and affordable too. If you wish to calculate the current rate of interest on PLI loans, visit PayBima online and use the PLI interest rate calculator. For best deals on all kinds of insurance, do go through the website.

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FAQs: PLI (Postal Life Insurance) Interest Rate on Loans

Is my PLI maturity amount liable for tax?

The income earned from your PLI as maturity is taxable. However, you may enjoy certain exemptions on tax under sections 80C and 10(10D). Also, the death benefit received by the nominee of a PLI policy in case of death of the insured is tax-free as per the Income Tax Act of India.

PLI vs. FD. Which is better?

PLI and FD are two separate tools of financial investment. PLI is a long-term insurance scheme, whereas FD is a short-term tool to fix and save money for a particular period. PLI will secure your family in the long run after your demise, while FDs fulfill your financial needs in the short term.

How are PLI plans beneficial?

PLI plans are beneficial in many different ways:

- They offer low premiums with high returns
- They are easy to transfer from one post office to another by writing an application
- These PLI plans allow the insured to avail loan against the plans
- PLI policies also offer the facility of nomination
- PLI policies are managed by a centralized system of accounting for a quick claim process

Which is the best PLI scheme?

Whole Life Assurance or Suraksha Postal Life Insurance is considered the best PLI because of its greater sum assured and various other benefits.

Which is better, PLI or LIC?

If you are eligible for PLI, it is better to opt for the PLI investment as compared to LIC because PLI offers greater returns at small premiums. Also, it has the added benefit of a bonus.

What is the process for claiming the PLI maturity amount?

To claim the PLI amount after maturity, you can visit the nearest branch of a post office and inform the concerned official. You will be given a form that you must fill out accurately. Submit the duly filled form and other documents as required. The concerned authority will verify the documents. Once the verification process is over, the post office will process your claim amount.

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Nov 18, 2022
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PayBima Team
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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