PLI VS LIC Which is better ?

PLI Vs PLI Which Is Better?

If you are still confused about PLI vs LIC which is better, here we will provide some important features of PLI vs LIC so that accordingly you can choose the best plan amongst both insurance providers. 

 Postal Life Insurance (PLI) was introduced on 1st February 1884. It started as a welfare scheme for the benefit of the postal. It is the oldest life insurer in this country. Over the years, PLI has grown substantially from a few hundred policies in 1884 to more than 50 Lacs policies as of 31.03.2021. 

 

It now covers employees of Central and state Governments, Defence and Para-Military Services, Public Sector Undertakings, Banks, Educational Institutions, Local Bodies, professionals (such as doctors, engineers, chartered accountants, MBAs, lawyers etc.), and employees of companies listed with National Stock Exchange (NSE) / Bombay Stock Exchange
(BSE), all graduate from recognized Universities in India.

Postal Life Insurance Scheme offers life insurance coverage with high returns on premiums.  The maximum sum assured offered under PLI is Rs. 50 lakh.

 

Few plans are similar in both insurance, hence here we will compare to most popular plan in PLI and LIC which is similar to their basic plan.

2. PLI and LIC ELIGIBILITY AND OTHER PARAMETERS
Parameters and Eligibility	LIC New Endowment Plan	PLI Santosh EA Plan
Individuals	All Indian Citizen	Government, PSUs and Government Bodies’ Employees, All Professionals and all degree/diploma holders, all graduates from recognized universities, BSE/NSE Employees, Graduates from recognized universities in India etc….
Minimum and Maximum  Ate at the time of  Entry	8 to 55 years	19 to 50 years
Policy Term	12 to 35 years	5 to 41 Year
Age at Maturity	20(min) and 70 (Max)	35(min) and 60 (Max)
Premium Payment Mode	Monthly, Quarterly, Half yearly or yearly	Monthly, Quarterly, Half yearly or yearly
Premium payment	All Mode- Online/ECS	Offline/Online except ECS
Loan	Yes	Yes
Surrender	Yes	Yes
Income tax Exemption 80-C	Yes	Yes
Tax Free Maturity	Yes	Yes
Available Riders	Accidental Benefit Rider, Term Rider	None
Maturity Benefits	Sum Assured + Bonus + Final Addition Bonus	Sum Assured +  Bonus+ Terminal bonus
Death Benefits	Sum Assured + Accumulated Bonus  + Final Addition Bonus (if any)	Sum Assured + Accumulated Bonus

 

# LIC NEW ENDOWMENT (914) VS PLI (SANTOSH) EA PLAN WITH EXAMPLE:-

Two instances of each of the two plans, with periods of 12 and 22 years, have been taken in
order to compare the premium, bonus, maturity, and death benefits.

Comparative Example-1
Details	LIC New Endowment Plan (914)	PLI Endowment (Santosh EA) Plan
Age at entry	23	23
Policy Period/Term	12	12
Age at Maturity	35	35
Sum Assured (A)	5,00,000	5,00,000
Monthly Premium (excluding GST)	3660	3475
Yearly Premium (B)	43920	41700
Total Premium (C )= (Bx12)	527040	500400
Bonus Rate Current (D)	35	52
Bonus Amount(Approx.) (E)=(A x 12 x D/1000)	210000	312000
FAB Rate (Approx.)(F)	0	0
Total Maturity (Approx.) (E)=(A+ E +F)	710000	812000

Another comparative (Example-2) has been done with a Premium payment term of -22 Years with the same Age and Sum Assured. 

For LIC final addition Bonuses announced periodically are applicable in cases where policies have terms longer than 15 years, such as LIC endowment plans. The maximum FAB in LIC for 40yrs and above policies is 3550 as last declared.

For PLI Terminal bonus of Rs. 20/- per sum assured of Rs.10,000/- subject to a maximum of Rs. 1000 for Endowment assurance policies with a term of 20 years or more is applicable.

 

# Risk Cover in PLI and LIC

As far as a death claim or risk cover in both plans cover Sum Assured + Accumulated Bonus up to a year of death, the following table charts out policy year-wise death claims for both plans.

•  As per the above examples, it is clear that PLI yields better in the short term while LIC plan yields higher in the longer term because of Final Addition Bonus (FAB).
•  The bonus rate in PLI is very high because it covers its limited clientele who have high life expectancy.
• LIC Plans are available to all Indian citizens including persons of Indian origin (PIO), but PLI is available for limited clientele like employees of the Central & State Government, Public Sector Undertakings (PSUs), and other Government bodies, and some professional, degree holders etc. However, recently PLI has extended its clientele.
•  LIC provides various life covering plans, pension plans, and term plans, in addition to accidental and disability riders which is extra coverage in case of an unexpected death, PLI provides only 6 simple vanilla plans without any riders.
• LIC has smart service and is more active in online services, however, now PLI also provides online payment facilities like its customer portal or IPBB mobile app and premium deposit through more than 1.5 lac post offices or salary deductions.
• LIC bonus rate depends on the policy terms whereas PLI has constant bonus rates for the whole period. PLI also provides the highest bonus rate than any other plan in LIC or another private insurance plan.
• Compared to LIC or any private insurers, PLI offers cheap premiums. So this is the biggest advantage of buying endowment plans with PLI rather than with LIC. However, in a longer period, LIC has a better return due to FAB.
• The bonus offered by PLI is in the approx. 7% or more, including life cover which seems much better. Whereas currently, LIC offers a bonus rate of around 4% to 5%.
•  PLI as well as LIC can buy online services provided by its available agents. In case LIC has more agent network however PLI agents can also easily be located in the Post office.
• In addition for the rural population rural postal life insurance is a good option.
• After comparing the benefit of both insurance provider’s policies, if you are eligible for Postal Life insurance, you may consider the PLI policy which provides a much better yield in a shorter period of the policy term compared to LIC, however in the longer run LIC may provide higher maturity value but the premium is higher then PLI in LIC policy. Before taking to any decision you check the above points in mind.