Life insurance is the lynchpin of a financial plan. The post office offers life insurance, but it is open only to employees of the Central and state governments, public sector undertakings and semi-government organisations. In October 2010, the Insurance Regulatory and Development Authority allowed the post office to sell insurance policies of private companies.
It was a tremendous opportunity for both the insurance industry as well as India Post. The industry suddenly had access to India's largest distribution network of 1.55 lakh offices while India Post could stand to earn good commission from selling insurance policies. However, the proposal has not taken off because the India Post does not want to push policies of other companies and instead wants to focus on its own Postal Life Insurance.
The Rural Postal Life Insurance can be bought by any citizen of India provided he is residing in a rural area, which is any location outside the limits of a municipality. India Post has sold 1 crore RPLI policies since they were launched in 1995. But almost 40% of these are micro insurance policies where the life cover is less than Rs 25,000. That's just enough to take care of a middle-class urban family for about a month.
