Rural Postal Life Insurance (RPLI) Policies

• 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

In the year 1993, the Malhotra Committee found that only 22% of the population had an insurance cover and that life insurance investments accounted for only 10% of household savings. The Malhotra Committee which was the Official Committee for Reforms in the Insurance Sector recommended starting the Rural Postal Life Insurance stating that the rural postmasters hold a position of trust in rural areas and can hence ensure better life insurance penetration in such areas.

The government implemented the plan put forward by the Malhotra Committee and created a Rural Postal Life Insurance scheme that allows citizens to avail life insurance from nearby post offices at affordable costs. This is said to be the only life insurance product in the Indian market which offers high returns at low costs. The objective of rural postal life insurance is to provide life coverage to the vulnerable sections of the society as well as women workers. The government also aims to spread awareness of the need for life insurance. As of 2015, over 23.51 million Rural Postal Life Insurance policies were purchased.

Benefits of Rural Postal Life Insurance

The Rural Postal Life Insurance scheme is a successful life insurance product because of the wide network of post offices and low operational costs. Here is a list of benefits of rural life insurance:

• Lapsed policies can be revived by paying the unpaid premiums.
• The insured individual can avail a loan by pledging his/her policy to the Head of the Circle.
• Policyholders can also assign policies to financial institutions to avail loans.
• Conversion of policies from one type to another is allowed after completion of a specified period. Only certain policy types are eligible for conversions.
• Change of nomination can be done by simply making a request to the postal insurance department.
• In case the original policy document is lost or damaged in any way, a duplicate copy can be issued.

Types of Rural Postal Life Insurance products

Various Rural Postal Life Insurance plans are offered such as whole life insurance and endowment insurance. Here is a list of the plans along with details of each plan.

1. Whole Life Assurance (Grama Suraksha)

This is a whole life insurance policy that provides life cover until the life assured reaches the age of 80 years. In case he/she passes away during the policy tenure, the sum assured plus bonus are paid to the nominee/legal heir. If, however, the individual survives up to 80 years of age, the sum assured along with the bonus is provided to the policyholder.

Policyholders can borrow a loan after completion of 4 policy years provided the policy has acquired a surrender value of minimum Rs.1,000. The Whole Life Assurance policy can be converted to an Endowment Assurance policy after 1 policy year has been completed and before the life assured reaches the age of 57 years.

2. Endowment Assurance (Grama Santosh)

This is an endowment insurance policy that provides the sum assured plus accumulated bonuses on maturity. In case the life assured expires during the term of the policy, the nominee/legal heir will be provided with the sum assured plus accumulated bonuses.

After completion of 3 policy years, policyholders can borrow loans if a minimum Rs.1,000 is available as the surrender value.

3. Convertible Whole Life Assurance (Grama Suvidha)

Five year post the purchase of the policy, the policyholder may choose to convert the whole life assurance plan to an endowment assurance plan. If the conversion is not done within 6 policy years, the policy will continue as a whole life assurance policy. Upon the death of the life assured during the policy term, the sum assured plus accumulated bonuses are paid to the nominee/legal heir. If the conversion is made, the maturity benefit payable will be equal to the sum assured plus accumulated bonuses. If the conversion is not made, the maturity benefit payable when the life assured reaches the age of 80 is equal to the sum assured plus bonuses.

After completion of 3 policy years, policyholders can borrow loans if a minimum Rs.1,000 is available as the surrender value.

4. Anticipated Endowment Assurance (Grama Sumangal)

This a life insurance product that individuals who wish to receive regular payments during the policy term can opt for. This plan has two money back options. The policy terms available are 15 years and 20 years. The benefits payable are as given below:

15 Years Money Back Plan
After 6th year	After 9th year	After 12th year	After 15th year
20% of sum assured	20% of sum assured	20% of sum assured	40% of sum assured

20 Years Money Back Plan
After 8th year	After 12th year	After 16th year	After 20th year
20% of sum assured	20% of sum assured	20% of sum assured	40% of sum assured

In case the life assured passes away during the policy term, the complete sum assured and accumulated bonuses are paid to the nominee/legal heir. The minimum and maximum age at entry for the 15 Year Money Back Plan is 19 years and 45 years respectively. And the minimum and maximum age at entry for the 20 Year Money Back Plan is 19 years and 40 years respectively. Policyholders may borrow loans from the policy.

5. 10-year Rural Postal Life Insurance (Gram Priya)

This is an endowment life insurance plan that is offered for a 10-year term. In case of unfortunate death of the life assured during the 10-year policy term, the sum assured plus accumulated bonuses are payable to the nominee/legal heir. If the individual survives the complete term, the maturity benefit equal to the sum assured and accumulated bonuses is payable to the policyholder.

6. Children Policy (Bal Jeevan Bima)

The Children Policy allows a maximum of 2 children to be covered under the policy along with 1 parent under whose name the policy has been purchased. The children are required to be between ages 5 and 20. In case of death of the policyholder, the death benefit equal to the sum assured plus accumulated bonuses is payable after completion of the policy term. However, on the death of a child covered under the policy, the death benefit is payable immediately. This policy does not offer loan facilities.

Points to note about Rural Postal Life Insurance

• Individuals between ages 19 and 45 can opt for this policy. In the case of the Whole Life Assurance policy, the maximum age at entry is 55 years.
• The minimum sum assured that can be opted for is Rs.10,000 and the maximum is Rs.5 lakh. In the case of the Children Policy, the maximum sum assured that can be chosen is Rs.3 lakh.
• The premiums payable towards the policy depend on factors such as the sum assured amount chosen and the age of the applicant.
• Policies can be surrendered after completion of 3 policy years.
• Policyholders are not eligible to receive bonuses if the policy is surrendered before completion of 5 policy years.
• Bonuses payable will be calculated based on a reduced sum assured if the policy is surrendered or if a loan is availed.
• Policyholders have the option to make the chosen policy a paid-up policy after completion of at least 3 policy years. In the case of the children plan, at least 5 years need to be completed to do so.
• For policies where the sum assured is above Rs.1 lakh, medical examination is mandatory. However, medical examination is not necessary for the children policy.

FAQs about Rural Postal Life Insurance

1. Is the Rural Postal Life Insurance plan only for government employees?

No, private sector employees may also opt for this plan.

2. Can the Rural Postal Life Insurance policy be deposited as security in financial institutions to obtain credit?

Yes, the policy can be utilised as collateral to avail loans and credit.

3. Can a policy be revived multiple times?

A Rural Postal Life Insurance policy can be revived only twice. Policies can be revived any time prior to one year before maturity.

4. Can individuals who reside in urban areas apply for the insurance?

No, only those who reside in rural areas qualify for this life insurance product.

5. What if the premium is not paid by the due date?

If the premium is not paid in a particular month, it can be paid in the following month by paying a nominal fine.

Rural postal life insurance policies can be beneficial to people living in rural areas where there is lack of awareness of life insurance products and less penetration of insurance too. The idea of postal insurance makes life insurance easily accessible and low cost in terms of the operations. Since the scheme is backed by the government, it is a guaranteed life insurance product too.

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