LIC Varishtha Pension Bima Yojana is a government-sponsored pension scheme for senior citizens. LIC was assigned as the sole insurer to offer this scheme, providing Immediate Annuity payouts throughout the lifetime of senior citizens. The plan was last launched again by the Government of India for one year from 15th August 2014 to 14th August 2015 following its first success.Read more
It is an Immediate Annuity Plan with a single premium option where the annuity starts immediately after premium payment and lasts throughout the pensioner’s life. Anyone above 60 years of age could invest in this scheme to start earning a pension as soon as they retired.
Its popularity was such that over 3.16 lakh policies had been sold by the LIC of India amounting to Rs.6,095 crores after it was first introduced in 2003. LIC Varishtha Pension Bima Yojana 2021 has not been declared yet.
The scheme encouraged pensioners to remain invested for a long time with a lock-in period of 15 years. This meant that the policy can be surrendered only after this period. This ensured that the policy benefits continued for a longer time as originally promised.
Surrendering during the lock-in was accepted if one was in urgent need of money such as in the case of a critical or terminal illness. LIC would then pay out a sum equal to 98% of the purchase price or premium. The remaining 2% is the exit load charged by LIC for surrendering the policy.
No medical check-ups are required before purchasing the LIC Varishtha Pension Bima Yojana.
LIC Varishtha Pension Bima Yojana annuitants can choose from various modes of payout, viz., monthly, quarterly, semi-annually, and yearly. The first payout for each of these frequencies will be respectively 1 month, 3 months, 6 months, and 1 year from the date of receipt of the purchase price.
The LIC Varishtha Pension Bima Yojana has a free look period of 15 days. The senior citizen will receive the whole of the premium paid by him or her if the policy is canceled during this period.
Once the purchase price is paid, LIC starts paying out the annuity amount as per the chosen mode immediately. LIC has capped the maximum annuity amount at Rs.60,000 per year. These annuities will continue until the death of the senior citizen.
On the death of the senior citizen, the Purchase Price is refunded to the family/spouse/beneficiary. If a loan was availed, the outstanding interest and any unpaid amount will be deducted from the purchase price.
This pension plan guaranteed an assured return rate of 9% per annum. Considering the current interest rates for fixed deposits or savings accounts, the returns on your money from LIC Varishtha Pension Bima Yojana are much higher than these other options.
Policyholders can opt for a loan against the policy after 3 years. The maximum amount of loan under LIC Varishtha Pension Bima Yojana can be 75% of the purchase price paid by you. LIC will recover the interest rate from every pension installment.
Income tax benefits can be availed on the purchase price under Section 80CCC of the Income Tax Act.
Here are the basic eligibility conditions of this guaranteed income pension plan –
|Entry Age (Last Birthday)||60 years||No limit|
|Purchase Price||Monthly: Rs. 66,665
Quarterly: Rs. 66,170
Half-yearly: Rs. 65,430
Yearly: Rs. 63,960
|Monthly: Rs. 6,66,665
Quarterly: Rs. 6,61,690
Half-yearly: Rs. 6,54,275
Yearly: Rs. 6,39,610
|Pension Amount||Monthly: Rs. 500
Quarterly: Rs. 1,500
Half-yearly: Rs. 3,000
Yearly: Rs. 6,000
|Monthly: Rs. 5,000
Quarterly: Rs. 15,000
Half-yearly: Rs. 30,000
Yearly: Rs. 60,000
The amount of pension depends on how much money is invested, in other terms the purchase price.
For Example, let us assume that Kamal buys LIC Varishtha Pension Pension Bima Yojana for Rs. 5 lakhs at 60 years of age. The buying amount will be Rs.5,15,450 including Rs.15,450 as tax. If Kamal selects an annual payout, he will receive a pension of Rs.46,903 at 9.38% ROI every year.
Let us look at the annuity rates for purchase prices of Rs.1,00,000, Rs.2,50,000 and Rs.5,00,000.
|Purchase Price (in Rs.)||Annuity Rates (in Rs.)|
To sign up & to claim pension amount –
Application form/proposal form
Accurate medical history
Other KYC documents
To surrender the policy –
Original policy document
Proof of medical treatment of pensioner or his / her spouse if the policy is surrendered within the lock-in period of 15 years
Proof of age if this detail has not been clarified earlier
To claim death benefit –
Claim forms: These should be in a format specified by LIC
Original policy document
NEFT mandate form
Bank details including bank name, account number, account type, and IFSC code
Proof of death or proof of title: The claimant can submit whichever document is applicable.
Proof of age: This is required if the proof of age of the pensioner is not mentioned under the policy