Postal Life Insurance Tax Benefits
Postal Life Insurance introduced in the year 1884 is deemed as one of the oldest life insurance providers in India. It offers a range of life insurance plans such as whole life insurance plans, endowment plans, child plans, and more. In addition to offering life insurance coverage at affordable premiums, Postal Life Insurance schemes also offer tax benefits and a lot more. Read on to understand all about Postal Life Insurance tax benefits as well as Rural Postal Life Insurance (RPLI) tax benefits.
Overview of Postal Life Insurance (PLI)
Administered by the Indian Post, Postal Life Insurance was initially introduced only for government employees. However, it later got extended to female employees and all other state employees, and other professionals such as chartered accountants, military personnel, central government employees, and many others. The minimum and maximum entry age to the Postal Life Insurance scheme depends on the type of Postal Life Insurance plan you are buying. Listed below are some of the popular Postal Life Insurance schemes that you can consider buying:
- Whole Life Assurance (Suraksha): This is a whole life assurance plan that either provides a lump-sum amount when the policyholder attains 80 years of age or death benefit if the policyholder meets an unfortunate demise. The minimum sum assured to this policy is Rs. 20,000 and the maximum sum assured is Rs. 50,00,000. Moreover, the premium payment age for this policy can be 55, 58, or 60 years.
- Convertible Whole Life Assurance (Suvidha): This is a convertible life insurance plan that can be converted into an endowment assurance plan. This plan provides a loan facility after 4 years of the policy term and a surrender facility after 3 years.
- Endowment Assurance (Santosh): With this plan, you can enjoy the benefits of getting a sum assured as well as an accrued bonus. While the minimum sum assured is Rs. 20,000, the maximum sum assured for this plan is Rs. 50 lakhs.
- Joint Life Assurance (Yugal Suraksha): As the name suggests, this Joint Life Assurance plan provides coverage for both spouses. This policy is available at a minimum policy term of 5 years and the maximum policy term is 20 years.
- Anticipated Endowment Assurance (Sumangal): This is a type of money-back policy that has a minimum entry age of 18 years and a maximum entry age of 45 years. This plan provides periodic payouts along with both death and survival benefits.
- Children Policy (Bal Jeevan Bima): The Bal Jeevan Bima policy as the name suggests is specifically designed for children. It has a minimum entry age of 5 years and the maximum entry age is 20 years. This policy is eligible for 2 children of the policyholder and does not offer loans and surrender benefits life other plans.
Overview of Rural Postal Life Insurance (RPLI)
The Rural Postal Life Insurance or RPLI provides life insurance in the rural sector at a very affordable premium. This scheme is eligible for both government and private employees. This scheme offers loan benefits as well as tax benefits. Some of the popular Rural Postal Life Insurance schemes are as follows:
- Gram Suraksha: This is a whole life assurance plan that is available at the minimum sum assured of Rs. 10,000 and maximum sum assured of Rs. 10 lakhs. It provides a loan facility after 4 years and a surrender facility after 3 years.
- Gram Suvidha: This scheme has a minimum entry age of 19 years and a maximum entry age of 50 years. The premiums of this scheme depend on the age of an applicant, the sum assured, and others.
- Gram Santosh: This is an endowment plan that is available at a minimum entry age of 19 years and a maximum entry age of 55 years. The minimum sum assured is Rs. 10,000 and the maximum sum assured is Rs. 10 lakhs.
There are other Rural Postal Life Insurance schemes that you can consider buying such as Gram Sumangal, Gram Priya, and Bal Jeevan Bima.
Tax Benefits on RPLI and PLI
Listed below are the tax benefits offered on Rural Postal Life Insurance (RPLI ) and Postal Life Insurance (PLI):
RPLI and PLI Tax Benefits Under Section 80C
Under Section 80C of the Income Tax Act of 1961, the premiums that are paid towards Postal Life Insurance schemes. The maximum tax deduction applicable under this policy is Rs. 1,50,000. However, it is important to note that all those policies issued before 31st March 2012 offer tax benefits of 20% on the sum assured and policies issued after this provide 10% tax benefits on sum assured. The tax benefit is only applicable if the taxpayer is the policyholder or has issued the policy for their spouse or children.
RPLI and PLI Tax Benefits Under Section 10(10)D
Section 10(10)D of the Income Tax Act provides tax benefits on the amount that is received on maturity. The policies that were bought from 2003-2012 offer tax benefits of 20% of the sum assured and those bought after that provide a tax rebate of 10% on the sum assured. Moreover, this section also provides tax benefits on any bonus accrued.
Tax Exemptions on Death Benefits
The death benefit paid out to the nominees of the policyholder is also exempted from tax deductions as specified in the Income Tax Act of 1961.
Summing Up
Thus, if you plan to buy Postal Life Insurance Schemes or Rural Postal Life Insurance Schemes, do not forget to avail tax benefits. If you wish to explore a range of other life insurance plans, you can contact us at InsuranceDekho.
FAQs
- Are the maturity payouts received on PLI and RPLI exempted from tax deductions?
Yes, the maturity payouts received from PLI and RPLI schemes offer tax benefits as specified in section 10(10D) of the IT Act.
- Is death benefit under RPLI tax exempted?
Yes, the death benefit received under RPLI is tax exempted.
- What are the different types of PLI schemes?
The different types of PLI schemes include Whole Life Assurance, Children Policy, Convertible Whole Life Assurance, Joint Life Assurance, and Anticipated Endowment.
