Insurance scheme in post office: Postal Life Insurance explained

Who can buy the insurance scheme in post office

• Employees of central and state governments, defence and paramilitary forces.
• Staff of public sector undertakings, nationalised banks, financial institutions, local bodies and government aided educational institutions.
• Professionals such as doctors, engineers, lawyers, chartered accountants, architects and management consultants.
• Employees of companies listed on recognised stock exchanges, and some other notified groups.

If you are not in an eligible group and live in a rural area, look at Rural Postal Life Insurance instead.

PLI scheme in post office: the basics in one place

The PLI scheme in post office is the main post office insurance scheme, sometimes called the post office life insurance scheme. It is separate from the savings schemes on this site: you pay a premium for life cover, not a deposit for interest. Brochures, proposal forms and premium tables are available in Hindi, so anyone looking for the post office PLI scheme in Hindi can ask for the Hindi set at the counter. A PLI scheme calculator in the sense of a fixed maturity figure does not exist, because the final amount depends on bonuses declared in future years; the India Post insurance portal gives premium quotes for your age and plan.

Medical insurance is not part of PLI. If you are comparing post office options for health cover, that is outside these schemes.

The six PLI plans

Entry age is generally 19 to 55, varying by plan.

PLI interest rate: why there is no interest

Many people search for the PLI interest rate in post office. Life insurance does not pay interest. Instead, PLI declares a yearly bonus per ₹1,000 of sum assured, which builds up and is paid with the sum assured on maturity or death. Endowment plans usually get a lower bonus rate than whole life plans because the payout comes sooner. The current bonus rates are published by the Department of Posts and change from time to time, so check the official figure before comparing.

Why PLI premiums are low

PLI is run by the government with low overheads and no profit motive, and the eligible groups are considered lower risk. As a result, premiums for the same cover are often lower than those of many private plans. The trade off is a narrower choice of products and a more paper based process.

Loans, surrender and claims

• Loan: available against the policy after it has run for some years (about four for whole life, three for endowment).
• Surrender: allowed after three years; the surrender value is lower than premiums paid in the early years.
• Claims: the nominee claims at the post office with the death certificate and policy bond; maturity claims are paid to the policyholder.

For other ways to borrow on post office savings, see post office loans.

Keeping a PLI policy healthy

• Pay premiums on time; a grace period applies, after which the policy can lapse and needs revival with arrears.
• Keep the nominee updated after marriage or other life changes.
• Store the policy bond and premium receipts; digital premium payment through the post office savings account reduces paperwork.
• On retirement or a job change, the policy continues; eligibility matters only when buying.

Compare PLI with long term savings like NSC and KVP if saving is the main aim.

PLI tax benefits

Old regime filers can fit PLI premiums inside the ₹1.5 lakh deduction, which the new Income-tax Act lists under section 123 in place of 80C. Maturity and death benefits are generally tax free when the conditions for life insurance payouts are met. The new regime gives premiums no deduction.

How to buy PLI

PLI vs saving schemes

PLI is insurance, not a savings scheme. If your goal is mainly to grow money, schemes like PPF or NSC are simpler. If you need life cover for dependants, a pure term plan gives the most cover per rupee; PLI's endowment plans mix cover with saving. Pick by need, not by habit.