All You Need to Know About PLI Interest Rate
Updated On Feb 08, 2024
Life insurance is a fundamental component of financial planning and provides a safeguard for the financial well-being of the policyholder's family. Recognising its significance, the Government of India offers various plans to extend the benefits of life insurance. And among these, Postal Life Insurance (PLI) is a great option.
In addition to providing the policyholder's family with financial security in the case of a sudden death, this insurance plan makes emergency loan access easier. Now, to give you a thorough knowledge, we will go into the details of PLI, concentrating on its eligibility criteria, calculation, benefits and more.
Understanding the Postal Life Insurance Scheme
Postal Life Insurance (PLI) is a Government of India initiative designed to provide life insurance benefits to professionals, as well as government and semi-government employees. Established in 1884 initially for Postal department employees, the scheme was later expanded to cover central and state government employees, defense personnel, and personnel from various government organisations.
Postal Life Insurance stands as one of the oldest and most trusted insurance schemes in India. With a maximum sum assured of Rs. 50 lakh, the PLI Scheme assures life insurance coverage with attractive returns on premiums.
Features of Postal Life Insurance Policy
The following are the features of a Postal Life Insurance policy:
- Nomination Facility: Policyholders can nominate beneficiaries and have the flexibility to make changes to the nomination as needed.
- Loan Facility: A loan facility is available, allowing policyholders to use their policy as collateral. This option is accessible once the policy reaches three years of maturity for Endowment Assurance policies and completes four years for Whole Life Insurance policies.
- Duplicate Policy Document: Policyholders can request a duplicate policy document if the original is lost, mutilated, burned, or torn. This ensures the insured has a replacement document for reference.
- Policy Revival: In case of a lapsed policy, policyholders have the option to revive it under specific conditions.
- Conversion of Policy: The Postal Life Insurance Policy allows for the conversion of a Whole Life Assurance policy to an Endowment Assurance Policy. Similarly, an Endowment Assurance Policy can be converted to another Endowment Assurance plan, following the insurer's regulations and guidelines
Different Types of PLI Policies
The different types of PLI policies are as follows:
1. Whole Life Assurance (Suraksha)
This insurance plan ensures that you or your beneficiaries receive a guaranteed amount, along with accrued bonuses, once you reach the age of 80. If, unfortunately, you pass away before turning 80, your legal representative or assignees will still receive the assured sum and bonuses, but only if the policy is active when the claim is made.
- Eligibility: 19-55 years
- Coverage: Rs. 20,000 - Rs. 50 lakhs
2. Endowment Assurance (Santosh)
Under this scheme, you receive the assured sum and accrued bonuses upon reaching a predetermined age (e.g., 35, 40, 45, 50, 55, 60). In case of demise before the specified age, your legal representative or assignees will receive the payout.
- Eligibility: 19-55 years
- Coverage: Rs. 20,000 - Rs. 50 lakhs
3. Convertible Whole Life Assurance (Suvidha)
This policy allows you to convert from Whole Life Assurance to Endowment Assurance after 5 years. The payout occurs upon reaching a predetermined age, or in case of demise before that age, your legal representative or assignees receive the benefits.
- Eligibility: 19-50 years
- Coverage: Rs. 20,000 - Rs. 50 lakhs
4. Anticipated Endowment Assurance (Sumangal)
This is a money-back insurance plan where you receive periodic benefits throughout the policy term. In case of demise, the full sum and accumulated bonus go to your legal representative or assignees. For a 15-year term, you receive benefits at the end of the 6th, 9th, 12th, and 15th years, with 40% on completion. For a 20-year term, benefits are at the end of the 8th, 12th, 16th, and 20th years, with 40% on completion.
- Eligibility: 19-40 years (20-year term), 19-45 years (15-year term).
5. Joint Life Assurance (Yugal Suraksha)
Designed for married couples eligible for Postal Insurance, this policy provides lifelong coverage for both spouses. The assured sum and bonuses are given at the policy term's end, and in the event of death, the surviving spouse or assignees receive the benefits.
- Age: 21-45 (couple)
- Coverage: Rs. 20,000 - Rs. 50 lakhs.
6. Children Policy (Bal Jeevan Bima)
This policy allows you to insure a maximum of two children between 5 and 20 years of age. Parents, aged below 45, are eligible to take this life insurance policy. The sum assured is Rs. 3 lakhs or equal to the parent's sum assured, whichever is less. In the unfortunate event of the parent's demise, no further premiums are required, and the full sum is paid at the policy's completion. The parent is responsible for premium payments.
How Much Interest Does Postal Life Insurance Offer?
Policyholders under the Postal Life Insurance (PLI) scheme have the option to avail a short-term loan. This feature becomes accessible after 3 to 4 years of policy inception (3 years for Endowment Assurance and 4 years for Whole Life Insurance). The interest rate for this loan is set at 10% per annum, calculated over a six-month period. This means that the interest amount is payable biannually.
It's important to note that failure to make timely interest payments results in the accumulation of pending interest, which adds to the outstanding loan amount. The PLI interest rate then becomes contingent on the total outstanding loan.
In the event of three consecutive untimely payments of the PLI loan interest rate by the policyholder, the insurer has the right to surrender the PLI scheme. The surrender value of the plan is then utilised to clear all pending interest amounts and the outstanding loan.
Bonuses in the Postal Life Insurance Scheme
Are you curious about the latest bonus rates for your Postal Life Insurance (PLI) schemes? If yes, then we've compiled a table below outlining the bonus rates for the financial year 2023-2024.
|
Postal Life Insurance Plan |
Bonus Rate as per PLI Scheme |
|
Whole Life Assurance or Suraksha Scheme |
Rs. 76 per 1000 Sum Assured (SA) each year |
|
Endowment Assurance or Santosh Scheme |
Rs.52 per 1000 SA each year |
|
Anticipated Endowment Assurance or Sumangal Scheme |
Rs.48 per 1000 SA each year |
|
Convertible Whole Life Assurance or Suvidha Scheme |
Rs.76 per 1000 SA each year (if Whole Life Insurance is not converted to Endowment Assurance). A bonus of endowment assurance shall be paid during conversion. |
|
Joint Life Assurance or Yugal Suraksha Scheme |
Rs.52 per 1000 SA each year |
|
Children Policy or Bal Jeevan Bima |
Rs.52 per 1000 SA each year |
Eligibility Conditions for Availing of a Loan Under the PLI Scheme
The following entities and individuals are deemed eligible to participate in Postal Life Insurance (PLI) schemes:
- Central and State Government Organisations
- Paramilitary Forces
- Defence Personnel
- Public Sector Undertakings (PSUs)
- Banking Institutions
- Educational Institutions Staff
- Local Bodies Employees
- Professionals
- NSE and BSE Listed Companies Employees
- Department of Posts Employees
Advantages of Postal Life Insurance in India
The advantages of Postal Life Insurance in India are as follows:
- Easy Access to Loans: You can easily secure a loan through the PLI scheme.
- Affordable Interest Rates: The interest rates are budget-friendly, making it a cost-effective option.
- Short-Term Emergency Support: The loan amount can be a helpful solution for managing short-term financial emergencies.
- Simple and Hassle-Free Process: The process of obtaining and handling the loan is straightforward, ensuring a hassle-free experience for the borrower.
- Flexibility in Nominations: You have the flexibility to change the nominated individual at any time.
- Policy Bond Reissue: In case of damage or loss, duplicate policy bonds can be re-issued to the insured.
- Revival of Lapsed Policies: Lapsed postal insurance policies can be revived, either after six unpaid premiums (if in force for less than three years) or after 12 unpaid premiums (if in force for more than three years).
- Conversion Options: Depending on certain conditions and rules, it's possible to convert a Whole Life Assurance to Endowment Assurance or switch between different Endowment Assurance policies.
PLI Calculation
You as a policyholder can use online tools like the PLI Interest Rate Calculator to determine the total premium amount for your policies. These calculators not only help you in calculating premiums but also assist in comparing different PLI plans.
The calculated premium includes the applicable GST, and users can determine payments for monthly, quarterly, half-yearly, or annual periods. It allows users to input information such as the policyholder's age, total sum assured, and policy term, generating a comprehensive premium breakdown.
Guidelines for Postal Life Insurance Customers
As a PLI customer, make sure you keep the below-mentioned guidelines in mind:
- Safeguard your Postal Life Insurance policy bond for smooth claim settlements and services, and inform your loved ones of its location.
- Register your email and mobile number at the nearest Post Office to access your Postal Life Insurance details conveniently.
- If your job relocates you within India, your Postal Life Insurance policy can move with you.
- Ensure timely and regular premium payments to maintain active life insurance coverage and avoid policy lapses.
- Take note of your Policy Bond's unique 13-digit number, the Policy number, for future reference and communications related to your policy.
- Maintain a valid nominee in your PLI policy to preserve the essence of life insurance, and update it as needed.
Conclusion
Postal Life Insurance (PLI) stands as a significant financial tool and provides comprehensive life insurance coverage with attractive returns on premiums. The scheme caters to professionals, government, and semi-government employees, offering various policy options to suit diverse needs and requirements. Moreover, beyond the financial security it provides in the event of an unexpected demise, PLI also facilitates easy access to emergency loans. This further enhances it's utility.
Frequently Asked Questions (FAQs)
- Can I change the nominee in my PLI policy?
Ans. Yes, PLI policyholders have the flexibility to nominate beneficiaries and make changes to the nomination as needed.
- When can I avail a loan under the PLI scheme?
Ans. Loan facilities are accessible after three years of maturity for Endowment Assurance policies and four years for Whole Life Insurance policies.
- What is the interest rate for the PLI loan?
Ans. The interest rate for the PLI short-term loan is set at 10% per annum, calculated over a six-month period, payable biannually.
- What entities are eligible to participate in PLI schemes?
Ans. Entities such as Central and State Government Organisations, Paramilitary Forces, Defence Personnel, and Professionals are eligible for PLI schemes.
- How can I calculate my PLI premium amount?
Ans. PLI policyholders can use online tools like the PLI Interest Rate Calculator to calculate the PLI premium amount. These online tools considers factors such as age, sum assured, and policy term to determine the total premium amount.
