LIC or postal insurance, a head-to-head comparison

In this age of uncertainty, buying life insurance is necessary for anyone with dependents. Two of the life insurance sellers, both backed by the Union government, are Life Insurance Corporation of India and the postal department.

Let’s have a look at both.

Postal Life Insurance

PLI (Postal Life Insurance) is like any other life insurance with the exception that it is managed by India Post. PLI currently offers only traditional endowment plans.

Therefore, term insurance or ULIPs are not available. The policies are offered by the government of India through post offices.

The advantage of PLI is that they offer the products at cheaper premium and also offer higher bonus rates than LIC.

PLI offers 6 types of policies — whole life assurance (Suraksha) convertible whole life assurance (Suvidha), endowment assurance (Santosh), anticipated endowment assurance (Sumangal), joint life assurance (Yugal Suraksha), children policy (Bal Jeevan Bima).

Life Insurance Corporation

LIC offers policies for every person according to his or her need. One has to comb every detail and decide on a policy which fits his or her needs.

Eligibility

To buy PLI you must be an employee of the Central and state governments, central and state public sector undertakings, universities, government-aided educational institutions, nationalised banks, local bodies, journalists, employee of any BSE and NSE listed company etc.

PLI also extends the facility of insurance to the officers and staff of the defence services and para-military forces. doctor, lawyers, chartered accountants, management professionals were also included into the list.

However, LIC offers it plans to all citizens of India irrespective of his/her employment pattern or structure. Therefore, LIC has a universal approach which PLI lacks.

There is no major difference except that LIC offers tern insurance policies where post offices do not have a presence.

Premium Rate, Bonus

When compared with LIC or private insurers, PLI offers cheaper premiums, which is a key feature of postal life insurance. Bonus offered by PLI is in the range of 7% or more.

PLI offers the highest bonus rate in the industry as high as Rs 85/thousand in whole life assurance (Suraksha) and convertible whole life assurance (Suvidha) scheme, Rs 58/thousand in three schemes like endowment assurance (Santosh), Joint Life Assurance (Yugal suraksha), Children Policy (Bal Jeevan Bima) and Rs 53/thousand in anticipated endowment assurance (Sumangal) policy.

Currently, LIC offers bonus rate between 4% and 5.5% which is far lower than PLI.

Where can you buy?

In case of PLI, you have to visit a post office where these schemes are offered. In case of LIC, you have to contact with a local agent. The agent can come to your doorstep and offer the service. LIC has started offering policies online, but this facility is absent in PLI.

Therefore, in case of buying LIC offers more flexibility than PLI.

Age-Limit

PLI offers insurance to anyone between 19-55 years. But LIC sells insurance to anyone up to 75 years (for some policies this upper limit is lower),

PLI offers you the maximum sum assured of Rs.50 lakh. However, in LIC the sum assured can be unlimited,

Premium Payment, tax benefits

In LIC, you can pay premium amount through agents, or visit LIC offices or pay through online mode. But for PLI, you have to visit the branch or use the services of an agent to deposit the money.

Both PLI and LIC offer same tax benefits under section 80C of the Income Tax Act.

LIC will make maturity payments directly to your bank account and the process is completely hassle-free. On the other hand, in the case of PLI the money will first go to a post office savings account.

If you don’t have this account, then you have to first open it, and then only you can access your money.