Postal Investment schemes

Financial Management

India Post

Founded on 1 April 1774 by Government of India

• Postal service• Financial service• Retail service

POST OFFICE SCHEMES

Savings Account• Any individual can open an account. • Cheque facility available. • Group Account, Institutional Account, other

Accounts like Security Deposit account & Official Capacity account are not permissible

• Rate of interest 4% per annum

Recurring Deposit Account

• A single adult or two adults jointly• Defaults allowed - 4• Rate of interest 8.40% • Part withdrawal • Maturity- 5 yrs• Minimum Deposit – Rs5 (multiples of 5)• Premature closure- 3 yrs

Monthly Income Scheme (MIS) Account

• Rate of interest 8.50%.• Maturity Period - Five Years.• Auto credit facility to SB Account.• Minimum limit- 1500/-• Maximum limit- 4.5 lakhs / 9 lakhs

Time Deposit Account

• 1 Year, 2 Year, 3 Year and 5 Year Time Deposit can be opened

• Premature closure- after 6 months, SA int. will be paid

• Rate of interest - 8.20%, 8.30%, 8.40%, 8.50% compounded quarterly for 1,2,3 & 5 years TD account respectively

• Minimum Deposit 200/- and in multiples

Public Provident Fund Account

• Individual account on his behalf or on behalf of minor of whom he is the guardian

• Minimum limit - 500/- in a financial year • Maximum limit - INR. 1,00,000/- in a financial year• IT Rebate • Interest of 8.80% p.a.• Loan facility available after 3 yrs with 2% p.a.

interest

National Saving certificate

Meaning(NSC) are certificates issued by Department of post, Government of India and are available at all post office counters in the country .It is a long term safe savings option for the investor. Trust and HUF cannot invest.This scheme is specially designed for Government employees, Businessmen and other salaried classes who are IT assesses.

Features of NSC VIII Issue

• National Savings Certificate is available in denominations of 100, 500, 1000 and 10000. This means that, an investment in NSC India can be done even with Rs. 100/-.

• There is no upper Limit to invest in National Savings Certificate. This means you can invest in NSC India any amount of money as there is no ceiling limit for investment.

• The maturity period of NSC India is 6 years.• The Rate of Interest on NSC India is 8% p.a. cumulated half yearly.• Pre closure is available for National Savings Certificate after the completion

of 3 years.• On payment of nominal fees, National Savings Certificate can be transferred

to any person. Transfer from one branch to another is also possible.

Advantages of NSC

• National Saving Certificates in India are Highly Secured Investment, since it is secured by Govt. of India.

• National Savings Certificate has a guaranteed rate of return of 8% p.a. (cumulated half yearly)

• National Saving Certificates in India are easily available from all post offices, in denominations of Rs. 100/-

• The principal amount which is invested in NSC India is eligible for tax benefit under 80C.

• The interest received at the time of maturity from National Saving Certificates in India will not be subjected to TDS.

• NSC India Deposits will not be considered as assets U/s 2 (ea) of Wealth Tax Act 1957

NSC IX issue (2011)

• New Post office savings scheme of 10 year maturity was introduced in December 2011.

• The government has introduced the new scheme on recommendation of a committee headed by Shyamala Gopinath, then deputy governor of Reserve Bank of India.

• The certificate will be available in the denominations of Rs.100, Rs.500, Rs.1,000, Rs.5,000 and Rs.10,000. There is no upper limit for investment in the scheme.

Types of NSC

3 types of NSC that can be brought by individual.Single Holder Type Certificate: This certificate can be bought

by an individual in his name or on behalf of minor, or a trust.

Joint 'A' Type Certificate: This certificate is issued to 2 adults jointly and is payable to both holders jointly or to the survivor.

Joint 'B' Type Certificate: This certificate is issued to 2 adults jointly and is payable to either of the holders or to the survivor.

Advantages of NSC XI 2011 • Certificate will earn interest at the rate of 8.7 percent per

annum, compounded semi-annually.• Under the new scheme, on investment of Rs.100, the depositor

will get Rs.234.35 after 10 years on maturity of the certificate.• The certificate is easily transferable. It can be transferred from a

post office where it is registered to any other post office and it can be pledged as a security.

• National savings certificate is a popular saving instrument for people who invest to save tax.

Senior Citizen Savings Scheme (SCSS) Account

• Senior Citizen.• Tax rebate• Opened by an individual or jointly with spouse.• Attained age of 60 years or above on the date of

opening of the account.• Attained the age 55 years or more but less than 60

years and has retired under a Voluntary Retirement Scheme or a Special Voluntary Retirement Scheme on the date of opening of the account within three months from the date of retirement.

• No age limit for the retired personnel of Defence services

• Non-resident Indians (NRIs) and Hindu Undivided Family (HUF) are not eligible to open an account.

• Minimum – INR 1000• Maximum – INR 15 lakh• No withdrawal shall be permitted before the

expiry of a period of five years

Premature closure of account is permitted

• 1. After one year but before 2 years on deduction of 1 ½ % of the deposit.

• 2. After 2 years but before date of maturity on deduction of 1% of the deposit.

Premature closure allowed after three years

• In case of death of the depositor before maturity, the account shall be closed and deposit refunded without any deduction along with interest.

• Interest @ 9.30% per annum from the date of deposit on quarterly basis.

Mutual Funds

• On 22nd January 2001, India Post in partnership with IDBI-Principal launched a scheme for distribution of mutual funds through post offices.

Easy steps for investing through the Post Office

• 1. At each designated post office one counter (AMFI qualified personnel) has been earmarked to receive the Mutual Fund applications;

• 2. An investor can approach the designated post office counters or the concerned postmaster for application forms and literature on the types of fund schemes available through the post office;

• 3. Thereafter he can hand the application forms duly filled along with requisite amount in the form of a demand draft/cheque to the counter staff. No cash will be accepted;

• 4. The counters accept the application forms as per the cut off time prescribed by the AMCs for accepting the applications for their schemes in the particular post office.

Postal Life Insurance Started on 1st February 1884

Extended insurance cover for female employees

Upper limit – Rs 40000

Now increased to Rs 10 Lakhs

It covers employees

• Central and state Govt• Central and state public undertakings• Universities• Govt aided education institutions• Nationalized banks• Local bodies• Defense staff

• Min Age at entry is 19 years Max Age at entry is 55 years

• Maturity amount is payable only to the Assignee, nominee or the legal heir after death of the insurant.

• Insurance cover starts from the date of acceptance of proposal to the extent of sum assured with accrued bonus

• Bonus shall accrue till the date of maturity• Higher bonus and lower premier than the Endowment

Policy.• Eligible for loan after payment of premier for 4years.

Whole life Assurance (Suraksha)

• Surrender of policy allowed after payment of premier for 3 years.

• The policy can be converted into an Endowment Assurance Policy after completion of one year and before 57 years of age of the insurant.

Salient Features Sum assured is payable either on survival to the term or on death

occurring within the term.

With Profit and a Without Profit plans are available under this policy.

Bonus for the full term is payable on the date of maturity or in the

event of death, whichever is earlier.

Premiums can be limited to shorter term or can be paid as single

premium.

Premiums cease on death or on expiry of term whichever is earlier.

Endowment Assurance (SANTOSH)

Restrictions Minimum Sum Assured Rs 20000

Maximum sum Assured Rs 10 lakhs

Surrender of policy and Loan available after 3 years.

BenefitsOn Death or Survival

Basic Sum Assured and bonus under the With Profit plan.

Basic Sum Assured only under Without Profit plan.

Convertible whole life Assurance (SUVIDHA)

Salient Features Initially the policy is a Limited Whole Life Payment Plan, i.e., sum

assured is payable only on the death of the life assured.

At the end of five years from the commencement of policy, the

policy holder has an option to convert it into an Endowment

Assurance for a suitable period at an enhanced premium.

Once converted, Sum assured is payable either on survival to the

term or on death happening within the term.

BenefitsOn Death:

If not Converted: Sum Assured is payable to nominees/beneficiaries

on death of life assured only.

If Converted: Sum Assured + Bonus (If it is a with profit plan).

On Survival:

If Converted: Sum Assured + Bonus (If it is a with profit plan).

15 years

• 6 years (20%)

• 9 years (20%)

• 12 years (20%)

• 15 years (40% +

Accrued bonus)

20 years

• 8 years (20%)

• 12 years (20%)

• 16 years (20%)

• 20 years (40 +

accrued bonus)

Anticipate

Endowment

policies

Anticipate Endowment Assurance (SUMANGAL)

JOINT LIFE ASSURRANCE

• It is a joint-life Endowment Assurance in which one of the spouses should be eligible for PLI policies. Life insurance coverage is provided to both the spouses to the extent of sum assured with accrued bonus with only one premium. All other features are same as an Endowment policy. All the above schemes have compulsory medical examination. For the non-medical policy of any category (except AEA and Joint Life Assurance for which Medical Examination is compulsory), the maximum Sum Assured is Rs 1 lac.

LIMITS OF SUM ASSURED IN POSTAL LIFE INSURANCE

• Any person who is eligible to the benefit of Post Office Life Insurance Fund under Rule 6, may effect an insurance-Whole Life Assurance, Endowment Assurance, Convertible Whole Assurance, Anticipated Endowment Assurance and YugalSuraksha Policy or all of them on his life for a sum not less than Rs. 20,000 in each class but not more than an aggregate of Rs. Twenty Lac (Rs. 20,00,000/-) in respect of one class/all classes of insurance policy (s) taken together. The value of policy shall be taken in multiples of Rs. 10,000/- after minimum limit of Rs.20,000/- i.e. Rs. 20,000/-, Rs.30,000/-,Rs.50,000/- and soon.

SCHEME FOR PHYSICALLY HANDICAPPED PERSONS

• The maximum limit of Insurance for Physically Handicapped persons in PLI is the same as others and he/she can take any one of the plans. Medical examination is compulsory under this scheme in order to determine the exact nature and extent of their handicap and its bearing on the life being insured. Depending upon the nature and extent of handicap, normal or a slightly higher premium is charged.

CHILDREN POLICY

• The Department has introduced Children Policy under PLI/RPLI, with effect from 20th Jan 2006. The salient features of this scheme are as under:-

• • The Scheme is envisaged to provide Insurance cover to the children of PLI/RPLI policy holders.

• • Maximum two children in family will be eligible to take children policy.

• • Children between the age of 5 and 20 years are eligible and maximum sum assured is Rs 1 lakh or equivalent to the sum assured of the main policy holder whichever is less.

• • The main policy holder should not have attained the age of 45 years.

CHILDREN POLICY• • No premium is required to be paid on the children policy on the death of

the main policy holder and full sum assured with the accrued bonus shall be paid to the child after the completion of the term of the children policy. On the death of the child/children, full sum assured with the accrued bonus shall be payable to the main policy holder.

• • Main policy holder shall be responsible for payments for the Children Policy. No loan shall be admissible on Children Policy. However, the policy shall have facility for making it paid up provided the premia are paid continuously for 5 years.

• • No Medical examination of the Child is necessary. However, the child should be healthy on the day of proposal and the risk shall start from the date of acceptance of proposal.

• • The policy shall attract bonus at the rate applicable to Endowment Policy. The POIF Rules amended from time to time shall be applicable to Children Policy.pted under Section 44 (d) of LIC Act, 1956.

PLI benefits• Highest return (bonus) with the lowest premium

• Change of nomination.

• The insurant can take loan by pledging his/her policy to Heads of the Circle/Region on behalf of President of India, provided the policy has completed 3 years in case of Endowment Assurance and 4 years in case of Whole Life Assurance. The facility of assignment is also available.

• Assignment of Policy to any Financial Institution for taking loan.

• Revival of his/her lapsed policy. Policy lapses after 6 unpaid premiums if it remained in force for less than 3 years and after 12 unpaid premiums if it remained in force for more than 3 years.

• Issue of Duplicate Policy Bond in case of the original Policy Bond is lost, burnt/torn/mutilation.

• Conversion from Whole Life Assurance to Endowment Assurance and from Endowment Assurance to other Endowment Assurance as per rules.

Postal Life Insurance (PLI)

2001-

2002

2002-

2003

2003-

2004

2004-

2005

2005-

2006

2006-

2007

2007-

2008

2008-

2009

2009-10

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

No. of Policies in forceSum Assured (in Rs. Crore)

Top five performing Circles (2008-09)

APS

Tamil N

adu

Mahara

shtra

Karnata

ka

Gujarat

0

500

1000

1500

2000

2500

Sum Assured(in Rs. Crore)

Sum Assured(in Rs. Crore)

Claims settled (2008-09)

Maturity Death Surrender 0

2000

4000

6000

8000

10000

12000

14000

16000

18000

Amount paid (Rs. In crores) Number

RPLI (Rural Postal life insurance)

Introduction• Rural Postal Life Insurance (RPLI) came into being as a for

Reforms in the Insurance Sector • The Government accepted the recommendations of

Malhotra Committee and allowed Postal Life Insurance to extend its coverage to the rural areas to transact life insurance business with effect from 24.3.1995, mainly because of the vast network of Post Offices in the rural areas and low cost of operations

• The prime objective - insurance cover to the rural public in general and to benefit weaker sections and women workers of rural areas in particular and also to spread insurance awareness among the rural population.

Rpli insurance plans

RPLI offers following types of plans:• 1. Whole Life Assurance ( GRAMA SURAKSHA)• 2. Convertible Whole Life Assurance (GRAMA

SUVIDHA)• 3. Endowment Assurance ( GRAMA SANTOSH)• 4. Anticipated Endowment Assurance (GRAMA

SUMANGAL)• 5. GRAM PRIYA • 6. Scheme for Physically handicapped persons

RPLI benefitsA RPLI policy holder may also get following facilities :-• Change of nomination.• The insurant can take loan by pledging his/her policy to Heads of the

Circle on behalf of President of India, provided the policy has completed 3 years in case of Endowment Assurance and 4 years in case of Whole Life Assurance. The facility of assignment is also available.

• Assignment of Policy to any Financial Institution for taking loan.• Revival of his/her lapsed policy. Policy lapses after 6 unpaid premia if it

remained in force for less than 3 years and after 12 unpaid premia if it remained in force for more than 3 years.

• Issue of Duplicate Policy Bond in case the original Policy Bond is lost, burnt or torn/mutilated.

• Conversion from Whole Life Assurance to Endowment Assurance and from Endowment Assurance to other Endowment Assurance as per rules.

Rural Postal Life Insurance (RPLI) (2008-09)

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

No. of Policies in ForceSum Assured (in Rs. Crore)

Top five performing Circles (2008-09)

Andhra Prad

esh

Mahara

shtra

Uttar Prad

esh

Tamil N

adu

Bihar 0

500

1000

1500

2000

2500

Sum Assured (in Rs. Crore)

Sum Assured (in Rs. Crore)

Claims settled (2008-09)

Maturity Death 0

2000

4000

6000

8000

10000

12000

14000

16000

18000

Amount paid (in Rs. Crore) Number

Who are eligible for obtaining a PLI policy?

• Employees of the following Organizations are eligible.• Central Government• Defence Services• Para Military forces• State Government• Local Bodies• Government-aided Educational Institutions• Reserve Bank of India• Public Sector Undertakings• Financial Institutions• Nationalized Banks• Autonomous Bodies• Extra Departmental Agents in Department of Posts

• Q. Whether salaried proffesionals in private sector can join PLI ?

• Q. Can one continue the policy if one quits the Government service ?

• Q. Age limit.

Kisan Vikas Patra• This scheme is available at all post offices and

brokers/agents of UTI, LIC and government schemes• Minimum Investment ( available in denominations of Rs.

100, Rs. 500, Rs. 1000, Rs. 5000, Rs. 10000 and Rs 50000. No maximum limit.

• Rate of interest 8.40% compounded annually. • Money doubles in 8 years and 7 months. • Two adults, Individuals and minor through guardian can

purchase. • Companies, Trusts, Societies and any other Institution not

eligible to purchase.

• Patras can be pledged as security against a loan to Banks/Govt. Institutions.

• Patras are encashable at any Post office before maturity by way of transfer to desired Post office.

• Patras are transferable to any Post office in India. • Interest income taxable but no TDS • Nomination facility available.

Conclusion

• Indian Post offers several Investment Schemes which are safe, secure and risk-free investment options and relatively more interest rates than bank deposits. Hence are good sources of investment.