Insurance products are never bought, they are sold. So true! Most of the insurance companies spend loads of money on heavy duty advertising and go on talking about their insurance policies in the media. They also have network of lakhs of insurance agents who in the lure of commissions are selling the insurance policies all over India. Not only this, they also offer freebies along with policies thus taking customer into their trap. The realization comes only after buying the policies, and now it is really late, as we had already burnt our hands.
So, how do you escape this scenario?
Have you ever thought of having policies with better returns and cover than the regular ones sold by insurance companies and agents?
Postal Life insurance is your answer. Although it has never been talked about just because the postal department neither spends on advertising nor has a network of agents running around all over place to sell the policies, a postal life insurance comparatively has far better policies than the one’s sold in the markets by our large insurance players.
The only restriction on these insurance policies are that they can be offered only to employees of all Central and State Government Departments, Nationalized Banks, Public Sector Undertakings, Financial Institutions, Local Bodies like Municipalities and Zilla Parishads, Educational Institutions aided by the Government etc. Such employees constitute comprise a large part of the population but they are still blissfully unaware of the benefits of postal life insurance.
Have you ever thought of having policies with better returns and cover than the regular ones sold by insurance companies and agents?
Postal Life insurance is your answer. Although it has never been talked about just because the postal department neither spends on advertising nor has a network of agents running around all over place to sell the policies, a postal life insurance comparatively has far better policies than the one’s sold in the markets by our large insurance players.
The only restriction on these insurance policies are that they can be offered only to employees of all Central and State Government Departments, Nationalized Banks, Public Sector Undertakings, Financial Institutions, Local Bodies like Municipalities and Zilla Parishads, Educational Institutions aided by the Government etc. Such employees constitute comprise a large part of the population but they are still blissfully unaware of the benefits of postal life insurance.
What is postal life insurance?
Postal life insurance run by the Department of Posts under the Government of India was started about 126 years ago in 1884. It was started as a welfare measure for employees of the Posts and Telegraphs department. As it started becoming popular, it was extended for the rest of bodies. In 1995, the Rural Postal Insurance was introduced exclusively for villagers who account for a majority of our population.
Following are the few plans, which are offered by PLI:
Plan Name
|
Santosh
|
Suraksha
|
Suvidha
|
Children Policy
|
Plan type
|
Endowment
|
Whole Life Plan
|
Convertible Whole Life Scheme
| |
Minimum Age at entry
|
19 years
|
19 years
|
19 years
|
5 years
|
Maximum Age at entry
|
55 years
|
55 years
|
55 years
|
20 years
|
Maximum sum assured
|
10 lacs
|
10 lacs
|
10 lacs
|
1 Lakh
|
Interest rate for loan
|
10%
|
10%
|
10%
|
NA
|
Bonus rates as on 2008-2009 per thousand
|
70
|
90
|
70
|
70
|
For the benefit of our readers, we have compared the insurance policies offered by the biggest insurer and Postal Life insurance and the results were quite surprising. We took Endowment plan offered by Postal Life Insurance i.e. Santosh and Endowment Assurance Plan offered by LIC. For the presented case, we took a 30-year-old male for a term of 20 years and a sum assured of Rs. 5 lakhs.
Plan name
|
Postal Life Insurance
|
LIC
|
Santosh
|
Endowment Assurance Plan
| |
Type
|
Endowment Plan
|
Endowment Plan
|
Sum assured (in Rs.)
|
5,00,000
|
5,00,000
|
Policy Tenure
|
20
|
20
|
Premium per month (in Rs.)*
|
2206#
|
2170
|
Bonus rate per thousand
|
70
|
42
|
Accumulated Bonus (in Rs.)
|
7,00,000
|
4,20,000
|
Maturity Value (in Rs.)
|
12,00,000
|
9,20,000
|
Return on investment
|
7.31%
|
5.50%
|
* Inclusive of Service tax
(#But actual amount is Rs1975)
| ||
The premiums for both the policies were nearly the same. But the main difference was created by the bonus amount offered by both the plans. Santosh plan by Postal department offers a bonus rate of Rs. 70 per thousand compared to Rs. 42 per thousand offered by LIC plan in the year 2008-09. Assuming the same bonus rate, the maturity value at the end of 20 years would be Rs. 12 lakhs for the Postal Life Insurance policy whereas for the LIC policy the maturity value of Rs. 9.2 lakhs. This includes the sum assured as well as the accrued bonus over the 20 years. The bonus rates of the past year have been assumed for the next 20 years. So ultimately you end up getting almost Rs. 2.8 lakhs more just by choosing the right product as the benefits and features of the both the products are more or less the same.
So if you are eligible, buy postal life insurance for yourself and create an insurance portfolio with comparative higher return on investment. Postal life insurance is a good option if you are just looking out to buy pure life insurance cover, unlike LIC and rest of the insurers which offer accidental death benefit riders and many other riders with extra premiums. They enjoy the same tax benefits the way a normal Life insurance policy receives. The premiums for these schemes can be paid at any of the post office across the country and loans are also available on the same.
This way we see that Postal Life Insurance carries immense value and everybody who is entitled should go for it.
The author, Ushma Shah, is senior research analyst with http://www.apnapaisa.com/ , a comparison site for financial products such as loans , investments and insurance plans
Input from Shri Joseph Rodrigues, Inspector Posts, Managalore
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