The Postal Life Insurance provided today dates back to 1884 when it was first established. This life insurance scheme is tailored for employees of the government and helps secure their family’s future financially in case of their unfortunate demise or pays a lump sum upon reaching maturity. The eligible policyholders are central government employees, defence personnel, employees of RBI, employees of State Government and local bodies including cooperative societies, nationalized banks and deemed universities.
The postal Life insurance is one of the many benefits of being a government or semi-government employee. These insurance policies are guaranteed by the government of India and offer low premiums with high bonuses. Even employees who have resigned or retired from their post can continue enjoying the benefits and cover of the policy by continuing to make timely premium payments at the nearest post office.
The postal life insurance also offers great convenience when it comes to paying premiums. Premiums can be paid via a deposit at the post office, through cheque or even through automatic salary deduction. The life insurance policies also offer each policyholder the option of covering up to 2 children. Though the premiums are slightly higher on the children’s policies, it covers both parents and children.
The postal life insurance policy allows for 2 revivals before becoming void. Policies that are in effect for 3 years or lesser have a 6 month revival period and policies that have been in effect for over 3 years have a 12 month revival period. If the policyholder is unable to make a monthly premium payment, they can do so in the subsequent month but will be fined RS 1 for every RS 100 assured.
Postal Life Insurance Policies available for employees of the central government or any other semi-governmental body:
- Whole Life Assurance: The Whole Life Assurance policy has a minimum entry age of 18 years with a maximum entry age of 55 years and pays out assured sum with accrued bonuses to the policyholder on maturity or the nominee or legal heir upon death of the policyholder. The minimum sum assured is RS 20,000 with the maximum being RS 50 Lakhs. If the policy has been in effect for over a year and if the policyholder has not attained the age of 57 years yet, the policy can be converted into an endowment policy. The policy allows for loans to be taken out however, if a loan is taken out before completion of 5 years, the policy is not eligible for any bonuses.
- Endowment Assurance: Similar to the whole life assurance, in this policy, the policyholder is given an assurance that they will be paid a benefit of the Sum Assured and accrued bonus upon the policy attaining the maturity period. A death benefit equal to the sum assured plus any accrued bonuses are paid to the nominee and the policy allows for loans after completion of 3 years but any loans taken before 5 years will void any bonus to be accrued. This policy also has a minimum entry age of 18 years and maximum entry age of 55 years.
- Convertible Whole Life Assurance: This policy, upon the completion of 5 policy years, can be converted into an Endowment plan provided that the age of the policyholder at the time of conversion does not exceed 55 years of age. If the policy remains unconverted after the completion of 6 policy years, it is treated as a Whole Life Assurance Plan. The policy attains a surrender value along with the provision of acquiring a loan after the completion of 3 policy years
- Anticipated Endowment Assurance: This policy is a money back policy designed for those policyholders looking for periodic returns. The policy offers 2 terms, 15 years and 20 years. If the 15 year policy term is chosen, the benefits are paid out in the following format; 20% of the benefits paid in 6 years, 20% paid in 9 years, 20% paid in 12 years and the remaining 40% along with accrued bonuses are paid at the end of 15 years. If the 20 year policy term is chosen, the benefits are paid out in the following format; 20% pad out in 8 years, 20% paid out in 12 years, 20% paid out in 16 years and the remaining 40% with accrued bonuses are paid out at the end of the 20th In the event of death of the policyholder, the nominee will not receive periodic payments but receive the sum assured with accrued bonuses as a lump sum
- Joint Life Assurance: If one of the spouses are eligible for a Postal Life Insurance policy, then the joint life assurance policy can be taken out by the eligible spouse which covers both the spouses with sum assured and accrued bonuses with only one premium having to be paid.
All the above schemes have a minimum sum assured of RS 20,000 and a maximum sum assured of RS 50 Lakhs and require compulsory medical examinations. For those policies that do not require a medical examination, the maximum sum assured is RS 1 Lakh
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GST of 18% is applicable on life insurance effective from the 1st of July, 2017