LIC Varishtha Pension Bima Yojana is a plan designed specifically for senior citizens. It is a pure retirement plan which provides lifetime pension in the form of immediate annuity to the pensioner. An annuity is a series of payments made to an annuitant over regular intervals. This plan was revived by the Government of India in 2014-2015 as the finance ministry clearly stated the popularity of this plan in the recent past. The Varishtha Pension Bima Yojana plan attracted a sellout of ₹6095 crore plus 3.16 lakhs policies. Since it for senior citizens, the minimum age of entry is 60 years and the mode of premium payment is single pay.
Post demonetization, banks were slashing interest rates on fixed deposits. For the purpose of guarding the interest of the senior citizens (above 60 years of age) against falling interest rates, Prime Minister Narendra Modi announced relaunching of this scheme with a guaranteed interest of 8 per cent for 10 years.
Note: All information given below is related to LIC Varishtha Pension Bima Yojana (VPBY 2014-15 withdrawn by LIC) and has been sourced from the official website of Life Insurance Corporation of India.
As mentioned before, this is an immediate annuity plan where you make a single premium payment and the annuity payout starts immediately.
If you are 60 plus, you are eligible for this plan and there is no specific requirement of a medical checkup.
If the policyholder is diagnosed with any terminal or critical illness, they can avail an option of Surrender Value.
The LIC Varishtha Pension Bima Yojana Plan offers various modes of payouts. You can select the payout as monthly, quarterly, semi-annually and annually. The frequency of payment will be 1 month | 3 months | 6 months |1 year from the date of receipt of premium.
Monthly Payout - Under the monthly payout option, you will receive an amount per month and the purchase price for the same starts from ₹66,665. You can invest up to ₹6.66 lakhs if you select the option of a monthly payout.
Quarterly Payout - Under the quarterly payout option, you will receive a payout every three months or four times in a year. The policyholder opting for this option can make a payment amount of ₹66,170 or ₹6,61,690 to begin with.
Semi-Annually - If the policyholder selects the payment option as semi-annual, they can begin by paying ₹65,430 or ₹6,54,275 to begin with.
Yearly Payout - This is an annual sum paid to the policyholder. Under this option you can make a payment amount of ₹63,960 or ₹6,39,610 to begin with.
The payout is in the form of National Electronic Fund Transfer (NEFT) or Electronic Clearing Service (ECS). The online mode of transfer has made it convenient for senior citizens.
Post 15 years of investment, the policyholder can surrender the policy and they will be refunded the purchase price, which is the premium price they have paid at the time of policy purchase.
Post 3 years of the lock-in period, a policyholder can avail a loan against this policy. The loan amount can be up to 75% of the policy amount and the rate of interest is decided by LIC.
The LIC Varishtha Pension Bima Yojana Plan comes with a free-look period of 15 days. If you wish to withdraw from the policy, the entire premium amount will be paid back.
Under the LIC Varishtha Bima Yojana Plan, the policyholder is entitled to guaranteed regular assured income. This amount is directly credited to the policyholder’s bank account.
In case of death of the policyholder, your mentioned nominee/beneficiary will receive the complete invested amount, which the pensioner has used to take out the policy, as death benefit.
You will be entitled to income tax benefits as per Sec 80CCC of the Income Tax Act 1961.
The LIC Varishtha Bima Yojana Plan can be easily combined with other investment instruments such as mutual funds, provident fund, endowment policies, etc.
Under the LIC Varishtha Bima Yojana Plan, the policyholder will receive ₹5,000 per month for a single premium payment of ₹6,65,665 or an annual sum of ₹60,000 for a premium payment of ₹6,39,610. This is a return of 9% and above. These returns are significantly higher than any other bank or savings account.
| Minimum Entry Age | : 60 years (completed) |
| Maximum Entry Age | : No Limit |
| Minimum Pension: | : Rs. 500/- per month |
| : Rs. 1,500/- per quarter | |
| : Rs. 3,000/- per half-year | |
| : Rs. 6,000/- per year | |
| Maximum Pension | : Rs. 5000/- per month |
| : Rs. 15,000/- per quarter | |
| : Rs. 30,000/- per half-year | |
| : Rs. 60,000/- per year |
Under this plan, the policyholder has an option to select the amount of pension or the purchase price. Listed below is the minimum and maximum Purchase Price.
| Mode of Pension | Minimum Purchase Price | Maximum Purchase Price |
|---|---|---|
| Yearly | Rs. 63,960/- | Rs. 6,39,610/ |
| Half-yearly | Rs. 65,430/- | Rs. 6,54,275/- |
| Quarterly | Rs. 66,170/- | Rs. 6,61,690/- |
| Monthly | Rs. 66,665/- | Rs. 6,66,665/- |
Listed below are purchase prices for pension rates of ₹1000/- under different modes of pension payments:
| Yearly | Rs. 93.8069 p.a. |
| Half-yearly | Rs. 91.7045 p.a. |
| Quarterly | Rs. 90.6767 p.a. |
| Monthly | Rs. 90.0000 p.a. |
Annuity rates for larger premium amounts:
| Mode of Pension | ₹1,00,000 | ₹5,00,000 | ₹5,00,000 |
|---|---|---|---|
| Yearly | ₹9,381 | ₹23,452 | ₹46,903 |
| Half-yearly | ₹9,170 | ₹22,926 | ₹45,852 |
| Quarterly | ₹9,068 | ₹22,669 | ₹45,338 |
| Monthly | ₹9,000 | ₹22,500 | ₹45,000 |
This policy comes with a single premium payment option, which has to be paid at the beginning. It is a pure annuity-based plan for senior citizens, and does not come with a life risk cover. The pension amount depends upon how much is invested. One must also note that this is an immediate pension plan where the annuity starts immediately if you have already paid the premium. Additionally, you do not have to submit any medical report or certificate as this plan does not provide any health cover.
Example, Mr. X has purchased the LIC Varishtha Pension Bima Yojana Plan for a sum assured of ₹5,00,000 at the age of 60 years. The purchase amount will be ₹5,15,450 as it will include ₹15,450 as service tax.
Mr. X has selected an annual mode of payout. This implies that for a policy of sum assured ₹5,00,000 and a 9.38% rate of interest is, the pension amount will be ₹46,903.
The first step begins with an application or proposal form which has to be filled by the interested applicant. The individual is required to fill in details regarding his or her medical history, address proof and KYC documents. In addition to this, the applicant is also required to submit Existence Certificate in the proforma of LIC.
In case of policy surrender, you are required to submit the following documents.
For claiming death benefits, you are required to submit the following documents.
What is annuity in LIC Varishtha Pension Bima Yojana?
An immediate annuity plan under the LIC Varishtha Pension Bima Yojana plan is a guaranteed income plan where the annuitant receives regular income on a yearly, semi-annually, quarterly or monthly basis.
What are the different types of annuity?
There are two kinds of annuities - immediate and deferred. An immediate annuity plan is where you will receive the annuity immediately post payment of premiums. A deferred annuity plan is where the annuity is paid after a limited period of time as selected by the annuitant. The LIC Varishtha Pension Bima Yojana plan is an immediate annuity plan.
