Postal Life Insurance Interest Rates in India

• Reduce taxable income by up to Rs. 1,50,000 deduction under section 80C**
• Convenient payment options - annual, half-yearly, quarterly or monthly premium payments
• Do more with plans that offer pure protection, retirement planning and investment options

The Postal Life Insurance scheme was initiated with the idea to provide inexpensive life insurance plans to postal employees. It was later extended to employees of the central government, state government, and semi-governmental bodies. The plan helps government employees provide financial protection against the risk of death to their family members. The plans available under the scheme offer high bonuses for low premiums. Purchasing a policy under the Postal Life Insurance scheme provides an insurance cum investment solution and is easily accessible since it is availed from post offices.

Loan against a Postal Life Insurance policy

Postal Life Insurance policies allow policyholders to avail loans after a certain predetermined period. Below are the details of the same:

• Loans can be taken from Endowment Assurance policies after completion of 3 policy years.
• Whole Life Assurance policies permit loans to be borrowed after completion of 4 policy years.
• The loan interest rate for Postal Life Insurance policies is calculated on a half-yearly basis and is equal to 10% per annum.
• The available loan limit is calculated based on the surrender value acquired by the policy.
• The loan interest for Postal Life Insurance policies is required to be paid on or before the 21st of the month every 6 months.

How loan against Postal Life Insurance affects bonus rates

It is advisable to avail loans from Postal Life Insurance policies only if absolutely necessary because it reduces the amount of bonus an individual receives. If a loan is availed within 5 policy years from the date of inception of the life insurance policy, bonuses will not be payable for that particular policy. If, on the other hand, a loan is borrowed after completion of the first 5 policy years, the bonus payable is calculated on the reduced sum assured.

Hence, during a cash crunch, it is essential for an individual to consider all options available before making a withdrawal from a life insurance policy.