Postal Life Insurance Tax Rebate

The Postal Life Insurance plans are traditional and do not have any Unit Linked plans or term insurance plans. Since the insurance policies are only for government employees, the premiums are very cheap, and the bonuses and sum assured offered for the low premiums are very attractive. The minimum sum assured is RS 20,000 Rs.20,000 with the maximum sum assured being RS 50 Lacs Rs.50 lakh.

The Insurance policies offered through PLI have tax benefits which are predominantly under Section 80C which basically states that a policyholder having a policy issued on or before 31^st March 2012 will be eligible to avail a tax deduction of 20% of the sum assured. For those who have availed a policy on or after 1^st April 2012 will be eligible to avail a tax deduction of 10% of the sum assured.

Thus, the policies offered by PLI not only guarantee an assured sum upon maturity or death but also helps the policyholder in claiming tax deductions and improve savings.

About Postal Life Insurance (PLI) Scheme

Postal Life Insurance is one of the most sought-after life insurance policies due to its affordable premiums and high coverage, which was initially introduced in 1884 for the Postal Department employees only. Later considering the need of life insurance of the rural population, Rural Life Insurance Plans were introduced.

Tax Benefits of Postal Life Insurance 

Tax Benefits of PLI Under Section 80C:

Premiums paid for a life insurance policy are tax deductible under Section 80C of the Indian Income Tax Act.

1. The total amount that may be deducted is restricted to Rs.1.5 lakh.

1. The amount of tax deduction permitted under this section for policies given on or before 31 March 2012 is 20% of the sum assured. 
2. The tax deduction available for PLI under 80C is only 10% of the sum assured for policies issued after 31 March 2012.
3. These benefits are exclusive to PLI plans purchased by the taxpayer or their spouse and children.

Tax Benefits of PLI Under Section 10 (10D):

The amount that the policyholder receives as a maturity benefit at the conclusion of the policy term plan will be subject to taxation under section 10(10D) if the following criteria are met:

1.  The premium amount per year must be less than 20% of the sum assured for PLI policies bought between 1 April 2003 and 31 March 2012.
2. The premium amount per year for PLI policies acquired after 31 March 2012 must be below or equal to 10% of the sum assured. 
3. If the sum assured is a minimum of ten times the annual premium, any income received as a maturity benefit will be entirely free from taxation.
4.  Section 10(10D) exempts bonuses and surrender benefits from taxation.

Death Benefit of PLI:

1.  According to the Income Tax Act of India, 1969, the death benefit provided to the nominees of a PLI policy upon the death of the policyholder is free from taxation.

Benefits of Postal Life Insurance 

The benefits of Postal Life Insurance Plans are mentioned below:

1. The policyholder can change the name of the nominee at any point in time.
2. After the plan's third anniversary, a lapsed policy may be restored if the policyholder was unable to pay the PLI premium for six months. Likewise, if the policy is older than three years, it may still be reinstated after the plan has expired for a year.
3.  If the original policy bond is lost, torn, damaged, or burned, Postal Life Insurance simplifies the process to obtain duplicate policy bonds.
4. The policyholder can convert from a whole life assurance plan to an endowment plan, as well as shift from one endowment plan to another subject to certain conditions. 
5. PLI enables the policyholder to obtain a loan if the policy is more than three years old in case of endowment assurance and four years in case of whole life assurance.

Eligibility for Postal Life Insurance

The following is the list of eligibility criteria for applying for postal life insurance policies

1.  Temporary and permanent employees of autonomous body established by stipulated rules of state or central government

1. All temporary and permanent central or state government employees

1. Defence services member, including those from extended service commission, short service commission, and other non-permanent commissions

1. In the Department of Post and Department of Telecommunication, all work-charged and industrial employees whose payment is regulated under ‘Fundamental Rules’

1. All temporary and permanent employees of The Dental Council of India, The Nursing Council of India, The Pharmacy Council of India, The Medical Council of India, and the Council of Scientific and Industrial Research

Rural Postal Life Insurance Tax Benefits

To offer financial support to those families belonging to the low-income category and with single earning member, Postal Life Insurance Offers Life Insurance plans to the rural population, known as Rural Postal Life Insurance. The tax deduction on Rural Postal Life Insurance can be claimed by the policyholders on premium paid under Section 80C, 10(10D), and 80D of Income Tax Act 1969 at applicable rates.

Policy Bonus on Postal Life Insurance for FY24

Here is the list of bonuses offered on PLI for FY24:

Note: The rates are applicable for 1 April 2023 for the bonus for FY24 for PLI policyholders.

Top 6 PLI Schemes You can Choose 

The following is the list of six PLI schemes you can select for 2023: