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Postal Life Insurance and Life Insurance Corporation of India: What’s the Difference?

When we talk about insurance policies by government, Life Insurance Corporation (LIC) is the first organization that comes to our mind. But not only LIC, Department of posts too offer life insurance under name of Postal Life Insurance (PLI). PLI was launched on February 1, 1884 and is the oldest insurance service provider. Only people working in government organization or associated with it can be a part of the scheme. On the other hand LIC policies are available to every Indian citizen, thus making it more popular among Indian population.

What is Postal Life Insurance?

Postal Life insurance is an insurance policy that is applicable for all the government employees, be it an employee of military force, financial institution, Deemed University etc. Any person from private sector cannot choose this policy. The entry age is 19-55 years for all plans except the child plan. Maximum entry age under children policy is 45 years; and the child should be between 5-20 years. The sum assured should be minim Rs. 20,000 to maximum Rs. 50 lakh. The premium can be paid monthly.
There are six plans under this, namely-
·        Whole Life Assurance (Surakhsha)
·        Convertible Whole Life Assurance (Suvidha)
·        Endowment Assurance (Sumangal)
·        Joint Life Assurance (Yugal Suraksha)
·        Children Policy (Bal Jeevan Bima)

What is Life Insurance Policy?

Life insurance policies offer you risk coverage and cater the monetary needs of the family after death of the policy holder. It is a chance to grow your investments and provides coverage against all sorts of risks. It is a long term investment tool that protects your child’s future expenses or your post-retirement expenses.
There are 8 types of insurance policies, namely-
·        Term Life Insurance
·        Whole Life Insurance
·        Endowment Policy
·        Money Back Policy
·        Savings and Investment Plans
·        Retirement Plans
·        Unit Linked Insurance Plans (ULIP)
·        Child Insurance Policy

Life Insurance Claim-

Life insurance claims are as follows-
1.     Death Claims-
While claiming under this condition, the beneficiary needs to submit the following documents-
·        A fully filled claim form
·        Original policy bond or contract
·        An original certificate copy of the policy holder’s death
·        Identity proof of beneficiary.

2.   Maturity Claims-

To avail maturity benefits, the following documents need to be submitted to the insurance company-
·        Original Policy Bond
·        Maturity Claim Form
Difference between Postal Life Insurance and Life Insurance Corporation of India-

Postal Life Insurance
Life Insurance Corporation of India
Eligibility
The policies are offered only to employees of state or central governments or employees of Nationalized Banks, Government aided Educational Institutions, Universities, Local Bodies, Public Sector Undertakings, etc.
Every Indian citizen is eligible for policies from LIC.
Bonus
The insured individuals or their beneficiaries receive seven percent as a bonus or more.
As per the current schemes, the rate of interest is in the range of four to five percent.
Sum Assured
The PLI allows Rs. 50 lakhs as the maximum sum assured.
With LIC, there is no limit to the maximum sum assured.
Premium payment
You need to visit the nearest post office branch for paying the premium. Electronic clearance system and online payment are other modes for premium payments.
The premium payment can be done through LIC branch, collection points, or even through online mode of payment.
Pemium rate
The premium rates of most plans are cheaper than those offered by LIC. You can also get a rebate of two percent by paying premium of 12 months in advance. There is also one percent rebate if premium is paid in advance for six months.
You have to pay comparatively higher premium for LIC.
How to purchase
You can purchase the policies only from the post offices.
The policies can be purchased either through the agents or by visiting the LIC office. The company has recently introduced online term plans and pension plans.
Maximum age limit
While purchasing the plan, the age of the individual should not be more than 55 years.
The maximum age limit for choosing insurance policies is 75 years.

As per section 80c of Income Tax Act, both the insurance providers offer tax deduction benefit.
Conclusion-
Postal life insurance is a better option if you are eligible for postal life insurance as compared to LIC. People choose LIC over PLI because the former one is more popular. If you or your family member is not associated with government or semi-government job, then you have no other option than to choose LIC policies or policy from any other reputable private company. LIC is mandatory but it is important to understand its functioning to make the best out of your purchase. It is wise to understand various terms associated with it. if you buy the plan without understanding it, the real motive to reap benefits at the time of maturity or death of the policy holder will be defeated.


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