LIC Varishtha Pension Bima Yojana

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. 

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What is the LIC Varishtha Pension Bima Yojana?

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.

Key Features of LIC Varishtha Pension Bima Yojana

  1. Lock-in Period & Surrender

    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.

  2. Exit Load In Case of Early Surrender

    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.

  3. Various Annuity Modes Are Available

    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.

  4. Free Look Period

    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.

Benefits Offered - LIC Varishtha Pension Bima Yojana

  1. Regular Assured Income For Life

    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.

  2. Return of Purchase Price on Death

    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.

  3. Guaranteed Assured Return

    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.

  4. Loan Benefit In Case of Urgent Capital Need

    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.

  5. Income Tax Benefit

    Income tax benefits can be availed on the purchase price under Section 80CCC of the Income Tax Act.

Who Can Buy LIC Varishtha Pension Bima Yojana?

Here are the basic eligibility conditions of this guaranteed income pension plan –

Criteria Minimum Maximum
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

How Does the Plan Work?

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.

Sample Annuity Rates

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.)
Annual Half-yearly Quarterly Monthly
1,00,000 9,381 9,170 9,068 9,000
2,50,000 23,452 22,926 22,669 22,500
5,00,000 46,903 45,852 45,338 45,000

LIC Varishtha Pension Bima Yojana – Documents Required

To sign up & to claim pension amount –

  • Application form/proposal form

  • Accurate medical history

  • Address proof

  • Other KYC documents

  • Existence Certificates

To surrender the policy –

  • Discharge form

  • 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

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LIC Varishtha Pension Bima Yojana -FAQs

  • Q: What is an annuity?

    Ans: An annuity is a regular income payable to the pensioner on a yearly, half-yearly, quarterly, or monthly basis to take care of their living expenses after retirement.
  • Q: What are the types of annuities?

    Ans: There are 2 types of annuities - immediate annuity and deferred annuity. Immediate annuity plans start paying pensions as soon as the purchase price is paid to the insurer. Deferred annuity plans start paying the assured income after a period called the deferment period. The latter is more suitable for those who have a few years before they hit their retirement age.
  • Q: Which is better – immediate annuity or deferred annuity?

    Ans: Each has its unique benefits. It entirely depends on the current age of the annuitant, the expected retirement age, and what purpose is the annuity serving, among others. An immediate annuity can be for someone who is nearing their retirement age while a deferred annuity can help those who have only just begun planning their retirement.
  • Q: How do I know which annuity is best for me?

    Ans: A lot of companies have come up with annuity payment options. A smart way to see which plan is best is to simply calculate the return percentage. LIC Varishtha Pension Bima Yojana has a return percentage of 9% and is backed by the Government of India.
  • Q: What factors do I keep in mind while selecting an annuity?

    Ans: Before deciding on an annuity plan, check out details such as your living expenses and expected future costs. Also, look for annuity plans that have the lowest investment amounts and the highest returns.
    Check out the available plans with Policybazaar.com and its custom comparison tables after you have estimated your requirements. Understand what the best plans offer in detail before you invest.
  • Q: How do I invest in an annuity?

    Ans: Most companies have made it extremely simple to invest in an annuity. All you need to do is fill out the application form, give the necessary support documents such as the proof of age, canceled cheque for account verification (if needed) and pay the premium or investment amount.
    If it is a single premium policy like LIC Varishtha Pension Bima Yojana, then a cheque or demand draft will work. Alternatively, if you have to make regular payments, then setting up automatic online payments is the most hassle-free way to go.
  • Q: Will the money come directly into the account or will I receive a cheque?

    Ans: How you receive your annuity depends on what options the company provides and what you decide works best for you. The easiest way to go is to choose direct account credit. This will make the entire process smooth as you would not have to drop a cheque every time into the account. LIC Varishtha Pension Bima Yojana directly credits the amount to your bank account.
  • Q: Will the money last for my lifetime?

    Ans: LIC Varishtha Pension Bima Yojana offers a lifetime payment that you will keep receiving as long as you are alive. You only need to show Existence Certificates to certify that you are still alive, and LIC will continue to fund your account with your annuity amounts.
  • Q: Will my spouse continue to receive an annuity after me?

    Ans: LIC Varishtha Pension Bima Yojana returns the purchase price to the beneficiary on the death of the pensioner. Annuities will stop on your death.
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