Postal Life Insurance For Central Government Employees

Postal life insurance is a convenient life insurance product offered to government and semi-government employees which requires individuals to deposit premiums at a post office. This scheme was established in the year 1884 and was designed to provide financial protection to government employees’ families in case they expire. Death benefits and maturity benefits are available under the policy. Central government employees, State government employees, defence personnel, employees of RBI and nationalised banks, employees of local bodies, employees of public sector undertaking, and employees of government-aided educational institutions are eligible for the plan.

Premiums for postal life insurance can be deposited in the post office by cheque or by auto-debit of the salary. If an individual is unable to make a monthly premium payment, he/she may make the payment in the following month but a nominal fine will be applicable. If premiums are not paid, the plan may lapse. A lapsed policy can be revived by paying the unpaid premiums. Policies that were in force for 3 years or lesser are given a 6-month revival period and policies that were in force for more than 3 years are given a 12-month revival period. Each policy allows a maximum of 2 revivals.

Postal life insurance plans also offer coverage of the policyholder’s children. A maximum of two children can be covered by paying an extra premium on the base policy. Also, disabled individuals can be covered under the plan. The premium payable for such persons is determined after the medical examination. The postal life insurance scheme is one of the benefits government and semi-government employees are provided with. The insurance is backed by the government and offers the plan at a low cost.

Benefits of postal life insurance for government employees

Postal life insurance lay out many benefits, a few are listed below:

• The plan offers coverage to the individual immediately after acceptance of the policy.
• It can be transferred from one location to another within India.
• Loans can be borrowed from the endowment assurance plan type after completion of 3 policy years.
• A whole life assurance policy can easily be converted to an endowment assurance policy.
• Premium payment can be delayed by a month but a fine of Rs.1 for every Rs.100 of sum assured will be applicable.
• The policy can be retained by paying premiums even if the individual retires from the job.
• The plan qualifies for tax benefits under the Income Tax Act.

Types of postal life insurance plan types offered to government employees

Different types of postal life insurance plans are offered to government and semi-government employees. Here are the details of the same:

1. Whole life assurance

This plan type offers the sum assured along with accumulated bonuses as the death benefit and maturity benefit. If the policy has been in force for 1 policy year and the individual’s age does not exceed 57 years, the policy can be converted to an endowment policy. Further, loans can be borrowed from the policy. However, bonuses will not be offered to policies where loans have been borrowed before the completion of 5 policy years.

1. Endowment assurance

This plan, too, offers the sum assured plus accumulated bonuses as the death and maturity benefit. The plan allows borrowing of loans after completion of 3 policy years but if loans are borrowed before completion of 5 policy years, no bonuses will be offered.

1. Anticipated endowment assurance

This is a money back policy that offers a percentage of benefits at regular intervals throughout the policy term. The policy term options available are 15 years and 20 years. After providing the payouts during the policy term, the remaining amount will be given at the end of the policy term. The sum assured plus accumulated bonuses is paid as a lump-sum death benefit if the life assured passes away during the term of the policy.

1. Convertible whole life assurance

This is a whole life assurance plan that can be converted to an endowment assurance plan after the completion of 5 years, provided the policyholder has not attained the age of 55 years. If the policy is not converted even after 6 policy years, the policy remains as a whole life assurance policy.

1. Joint life assurance

A joint life assurance policy can be availed by married couples where one of the spouses are eligible for a postal life insurance plan. This plan requires only a single premium to be paid for both the individuals covered.

Points to note

• The minimum sum assured is Rs.20,000 and the maximum is Rs.50 lakh.
• Medical examinations are required for acceptance of the application.
• For policies that do not require a medical examination, the maximum sum assured is Rs.1 lakh.
• The plan can be purchased by individuals between ages 18 and 55.
• The premium modes available are yearly, half-yearly, and monthly.
• A few policies can be returned within the policy term after completion of a specified time period.
• The plan is not available in all post offices in India. Only a few post offices that have a postal life insurance division offer this plan.

FAQ about postal life insurance

• How can a postal life insurance policy be transferred from one post office to another?

The policyholder is required to submit an application to either the post office where he/she pays the premiums or where he/she desires to pay the premiums. The post office, after accepting the application, will send it to the Chief Post Master General.

• Can salaried individuals from the private sector avail postal life insurance?

No, the plan has been designed for government and semi-government employees only.

• What is the interest rate on the loans availed?

The interest applicable on the loans borrowed is 10% p.a. calculated on a half-yearly basis. The interest is required to be paid half-yearly.

• How can a lapsed policy be revived?

The individual can apply for revival of the policy and pay all due premiums. After payment of unpaid premiums along with interest and submission of a good health certificate, the policy will be revived. Bonuses will be added to the policy after it is revived.

• What are the terms of policy surrender?

• Whole life assurance policies can be surrendered after completion of 4 policy years only.
• Endowment assurance policies can be surrendered after completion of 3 policy years only.
• Children policy can be surrendered after 5 policy years only.
• Anticipated endowment assurance policy cannot be surrendered.
• Bonuses will be considered for addition to the surrender benefit only if 5 policy years have been completed.

Postal life insurance is a highly convenient and affordable life insurance plan that can be availed by government and semi-government employees who are looking for simple and cheap life coverage that offer good returns too.