Postal Life Insurance: Steps To Close Your Policy

Postal Life Insurance (PLI) is a life insurance scheme that was introduced in India in 1884 as a welfare scheme for Postal Department employees. Over the years, it has expanded its coverage to include various other groups, such as central and state government employees, defence personnel, public sector employees, and professionals. PLI offers financial security with low premiums, extensive coverage, and flexible policy options. This paragraph aims to provide an introduction to the topic of closing postal life insurance, which will be discussed further in the subsequent paragraphs.

Cancelling postal life insurance

Postal Life Insurance (PLI) is a type of life insurance scheme offered by the Department of Posts in India. It was introduced on February 1, 1884, as a welfare scheme for postal employees. Over the years, it has expanded its coverage to include various other groups, such as central and state government employees, defence services, paramilitary forces, educational institutions, and more.

Cancellation Policy

PLI offers an option to exit the policy with a premium refund at the age of 60. This option is available for all types of policies offered under the PLI scheme, including Whole Life Assurance, Convertible Whole Life Assurance, Endowment Assurance, Anticipated Endowment Assurance, Joint Life Assurance, and Children Policy.

Process of Cancellation

To cancel your PLI policy, you can follow these steps:

• Contact the nearest post office or a field officer of Postal Life Insurance.
• Provide them with your policy documents, including the original policy bond and premium receipt book.
• Submit a written request for cancellation and refund, stating your reason for cancelling the policy.
• The post office will process your request and initiate the cancellation procedure.
• You may be required to pay a penalty or fee for early cancellation, depending on the terms and conditions of your specific policy.
• Once the cancellation is complete, you will receive a confirmation, and any applicable refund will be processed and returned to you.

Alternative Options

If you are facing financial difficulties or are no longer interested in continuing your PLI policy, there are a few alternative options to consider before opting for cancellation:

• Policy Conversion: PLI allows policyholders to convert their Whole Life Assurance policy to an Endowment Assurance policy, providing flexibility in the maturity date and premium amount.
• Premium Payment Options: PLI offers flexible premium payment options, including monthly, quarterly, half-yearly, and annual payments. You can choose the option that best suits your financial situation to avoid cancellation due to financial strain.
• Revival of Lapsed Policy: If your policy has lapsed due to non-payment of premiums, you can revive it within a certain period by paying the overdue premiums along with any applicable interest or penalties.

Remember to carefully review the terms and conditions of your specific PLI policy before making any decisions regarding cancellation. The above information provides a general guide, and specific details may vary depending on your individual policy and circumstances.

Refund policy

Postal Life Insurance (PLI) offers a range of refund options for policyholders. Introduced in 1884, PLI is one of the oldest life insurance schemes in India, initially catering to postal employees but now covering various other groups.

PLI provides a flexible refund policy, allowing policyholders to exit the policy with a premium refund option at the age of 60. This option ensures that individuals can opt-out of the policy and receive their premiums back if they no longer wish to continue or require alternative insurance coverage.

In addition to the exit option at 60, PLI also offers a grace period for premium payments. Policyholders can pay the premium in the subsequent month by paying a penalty of 1% of the premium rate per month if they miss a monthly payment. This flexibility helps individuals who may face temporary financial constraints or simply miss a payment deadline.

Furthermore, PLI offers a revival option for lapsed policies. If a policy has lapsed due to non-payment of premiums, it can be revived within two years from the date of the first unpaid premium by paying the overdue premiums, along with interest and submitting a declaration of good health. This revival option provides a second chance for individuals who may have faced financial difficulties or other circumstances that led to their policy lapsing.

PLI also provides a refund option for individuals who are not satisfied with their purchase. Policyholders can cancel their policy hassle-free and receive a refund by initiating the cancellation process through the Policybazaar website. This refund option ensures that individuals are not locked into a policy they are unhappy with and can make alternative arrangements if needed.

Lastly, PLI offers tax benefits on premium payments under Section 80C of the Income Tax Act. Policyholders can claim a rebate on the premiums paid, reducing their taxable income. This benefit further enhances the affordability of PLI policies and can be considered an indirect refund or savings for policyholders.

Grace period for unpaid premiums

A grace period is a set amount of time, usually 30 days, during which you can pay your premium after the premium due date without your coverage lapsing. This is a standard feature of most life insurance policies, including Postal Life Insurance, and acts as a safeguard for those who are unable to pay their premium on time for any reason.

If you miss a premium payment, your policy will enter a grace period, which is like an interval between the premium due date and the lapse of the policy. This is one of the best benefits of term insurance, as without it, a person who is unable to pay their premium due to sudden emergencies would find their coverage unfairly cancelled.

During the grace period, your policy remains valid, and you are still covered. If you die during the grace period, your beneficiary will still receive the death benefit, although the outstanding premium may be deducted.

If you don't make your premium payment during the grace period, your policy will lapse and your coverage will end. You may be able to have it reinstated, but you will likely have to go through medical exam underwriting and pay higher premiums.

Claim settlement process

To close a Postal Life Insurance (PLI) policy, the policyholder or their beneficiaries will need to go through the claim settlement process. This process involves receiving the sum assured and applicable bonuses, either upon the policy's maturity or the insured's death. Here is a detailed, step-by-step guide on the claim settlement process for PLI:

• Notification: In the event of the policyholder's death, the nearest post office, known as the Head Post Office, must be notified. This step is crucial to initiating the claim settlement process.
• Documentation: The claimant or beneficiary will need to submit the required documents, including the original policy bond, premium receipt book (PRB), and loan repayment record (if applicable). It is essential to have these documents readily available to ensure a smooth process.
• Review and Processing: The PLI authorities will review and process the submitted claim. This process typically takes 15 to 90 days, depending on the type of claim. During this time, the authorities will verify the submitted documents and ensure that all requirements are met.
• Disbursement: Once the claim is approved, the claimant or beneficiary will receive the claim amount. This can be done electronically or via cheque, depending on the preference of the claimant and the policies of the PLI scheme.
• Additional Facilities: PLI offers various additional facilities to policyholders, such as the revival of lapsed policies, assignment of policies for loans, conversion of policy types, and the issuance of duplicate policy bonds. These facilities provide flexibility and support to policyholders and their beneficiaries.

It is important to note that the claim settlement process may vary slightly depending on the specific PLI scheme and the circumstances of the claim. However, the overall process is designed to be transparent and timely, ensuring that the policyholder's family receives the financial support they need during a difficult time.

By following these steps and staying informed about the PLI scheme's terms and conditions, policyholders and their beneficiaries can effectively navigate the claim settlement process and receive the benefits they are entitled to.

Tax benefits

Postal Life Insurance (PLI) is one of the oldest insurers in India, having been founded in 1884 to provide life cover to employees of the Postal Department. Over time, PLI extended its plans to include employees from various government and private sectors, and later, to the rural population through its Rural Postal Life Insurance (RPLI) segment.

PLI offers a range of insurance products, including whole life insurance, endowment-based insurance protection, and child plans. The tax benefits associated with PLI are a key reason why people choose these policies.

PLI Tax Benefits Under Section 80C:

PLI policyholders can claim tax deductions on the premiums they pay towards their life insurance policies under Section 80C of the Indian Income Tax Act. The maximum total deduction allowed is Rs. 1.5 lakh.

For policies issued on or before March 31, 2012, the tax deduction under this section is limited to 20% of the sum assured. For policies issued after this date, the tax benefit is limited to 10% of the sum assured.

These tax benefits are applicable only to PLI insurance policies purchased for the taxpayer, their spouse, or their children.

PLI Tax Benefits Under Section 10(10D):

The maturity benefit received by the policyholder at the conclusion of the policy term plan may be subject to taxation under Section 10(10D) if certain criteria are met:

• For PLI policies purchased between April 1, 2003, and March 31, 2012, the premium amount per year must be less than 20% of the sum assured.
• For PLI policies acquired after March 31, 2012, the premium amount per year must be below or equal to 10% of the sum assured.

If the sum assured is at least ten times the annual premium, any income received as a maturity benefit will be entirely tax-free. Additionally, Section 10(10D) exempts bonuses and surrender benefits from taxation.

PLI Income Tax Exemption on Death Benefit:

According to the Indian Income Tax Act of 1961, the death benefit provided to the nominees of a PLI policy upon the death of the policyholder is exempt from taxation.

Rural Postal Life Insurance (RPLI) Tax Benefits:

RPLI policies offer the same tax benefits as regular life insurance policies. Policyholders can claim tax deductions on premiums paid and benefits under Section 80C, Section 10(10D), and Section 80D of the Indian Income Tax Act of 1961.

Frequently asked questions