LIC Varishtha Pension Bima Yojana is a senior citizen pension scheme as advocated by the Government and incorporated by LIC. The Pension plan provides annuity payouts like an Immediate Annuity plan for senior citizens. The plan was last launched again by the Government of India for a limited period when the finance minister in his 2014-15 budget speech mentioned that the success of the earlier LIC Varishtha Pension Bima Yojana plan needs to be replicated and allowed the plan to be revived for one year from 15th August 2014 to 14th August 2015.
Invest 20 Lacs Get ₹ 1.6 Lacs pension for Life
Guaranteed Return For Life
Multiple Annuity Options
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
The plan is only available for people above 60 years of age.
Over 3.16 lakh policies of LIC Varishtha Pension Bima Yojana had been sold amounting to Rs. 6,095 crores in its earlier avatar that reflect its popularity among senior citizens. The plan offers a return of 9.3% per annum. Annuitants only need to pay a single premium to enjoy the benefits of the LIC Varishtha Pension Bima Yojana plan. The cover has a lock-in period of 15 years, though LIC allows policyholders to withdraw the sum they need by paying a fee (called exit load) on the amount withdrawn. The exit load is 2% of the amount taken out by the LIC Varishtha Pension Bima Yojana policyholder.
It is an Immediate Annuity Plan with a single premium option where the annuity starts immediately after premium payment from the next chosen date.
Annuity payouts will be paid as per the frequency chosen immediately after the premium is paid. LIC has provided an upper limit of Rs. 60,000 p.a. for the LIC Pension Plans Varishtha Pension Bima Yojana
|
Minimum |
Maximum |
Entry Age (Last Birthday) |
60 years |
No limit |
Purchase Price |
63,960 |
6,39,610 |
Yearly Annuity Payout |
6000 |
60,000 |
Annuity Payout Frequency |
Monthly, quarterly, half-yearly, yearly |
This section will provide more details on the minimum or maximum amounts that can be paid under LIC Varishtha Pension Bima Yojana, sample pension rates, and annuity rates. This will help you get a realistic picture of how much you need to pay and the amounts you will receive.
LIC Varishtha Pension Bima Yojana – Maximum and Minimum Premium Amounts
Under the LIC Varishtha Pension Bima Yojana plan, the amount of the single premium varies depending on how frequently the pension needs to be paid. For instance, if the pension has to be paid on a monthly basis, then the premium is more than when it has to be paid quarterly. This means that the premium is less for the annual pension payments.
Mode of Pension |
Minimum Premium Amount |
Maximum Premium Amount |
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 |
The sample pension rates under the LIC Varishtha Pension Bima Yojana provide an idea of how much pension a policyholder will receive on payment of a certain amount. For ease of reference, a sum of Rs. 1000 is taken as premium paid under the LIC Varishtha Pension Bima Yojana.
Frequency |
Pension Rates |
Yearly |
Rs. 93.8069 pa |
Half-yearly |
Rs. 91.7045 pa |
Quarterly |
Rs. 90.6767 p.a. |
Monthly |
Rs. 90.0000 p.a. |
As we have discussed, that this plan comes with an option of a single premium payment which is required to be paid at the starting of the policy. It is an annuity plan for senior citizens that does not come with a life cover. The amount of pension depends on how much money is invested. One should also be aware that is an immediate pension policy where the annuity starts instantly if you have paid the premium. In addition to this, you are not required to submit any type of medical certificate or report as this policy does not provide any health coverage.
For Example, If Kamal buys LIC Varishtha Pension Pension Bima Yojana for Rs. 5 lakhs of sum assured at 60 years of age. The buying amount will be Rs. 515450 including Rs. 15,45- as tax. Kamal selected an annual option of payout. This indicates that for a plan with a sum assured of Rs. 5 lakh and 9.38 percent ROI, the pension amount will become Rs. 46,903.
The above sample pension rates for LIC Varishtha Pension Bima Yojana can be further elaborated for larger premium amounts. Let us look at the annuity rates for Rs. 100,000, Rs. 250,000 and Rs. 500,000.
Mode / Purchase Price |
100,000 |
250,000 |
500,000 |
Annual |
9381 |
23,452 |
46,903 |
Half-yearly |
9170 |
22,926 |
45,852 |
Quarterly |
9068 |
22,669 |
45,338 |
Monthly |
9000 |
22,500 |
45,000 |
Grace Period: The grace period is not applicable.
Policy Termination or Surrender Benefit: The policy can be surrendered after 15 years where the purchase price is refunded. On diagnosis of a Critical or Terminal Illness, the policy can be surrendered before 15 years and 98% of the Purchase Price is refunded.
Free Look Period: If you would not be satisfied with the coverage and terms and conditions of the policy, you have the option of cancelling the policy within 15 days of receipt of the policy documents, provided there has been no claim.
Inclusion
The loan is available under the plan after the completion of 3 years up to a maximum of 75% of the Purchase Price. The interest on the loan will be recovered from the annuity payments.
On signing up and during the tenure of LIC Varishtha Pension Bima Yojana
The policyholder has to fill up an ‘Application form/ proposal form’ with accurate medical history along with the address proof and other KYC documents. The LIC Varishtha Pension Bima Yojana pensioner must also submit Existence Certificates at specified time intervals. These certificates are to be submitted in the proforma of LIC.
On surrender of LIC Varishtha Pension Bima Yojana policy
LIC Varishtha Pension Bima Yojana pensioner should submit the following documents:
For payment of death benefits under LIC Varishtha Pension Bima Yojana
The documents that need to be submitted include:
Annuities are payments received by the pensioner/investor for payment of a certain sum or sums of money over a prior period. Annuities help secure a continuous payment for a person that helps him or her to take care of their living expenses and other costs. In that sense, annuities can be compared to pensions, though, unlike pensions, you may opt to receive the annuity on different payout frequencies. For instance, under LIC Varishtha Pension Bima Yojana you have the option to receive annuities on an annual, semi-annual, quarterly, and monthly basis. You can choose a yearly payout for larger expenses that you need to pay such as tax, travel, home repainting, or repair. The half-yearly payouts can be used for similar larger expenses say traveling to children’s place twice a year if they stay in a different city. Similarly, you can choose quarterly or monthly payments.
You can also choose to receive annuities much earlier than the age from which pensions generally accrue. However, the regular nature of the payment means that people generally opt to use annuities as pensions when they have stopped working and there is no regular salary income.
There is a bewildering range of annuity options in the market including LIC Varishtha Pension Bima Yojana. The ones you choose will depend on a few factors such as your needs, the premium you can afford, the type of returns you seek, and so on. Let us look at some of these in brief detail.
Your needs will determine how much of an annuity you will need. LIC Varishtha Pension Bima Yojana provides a maximum pension benefit of Rs. 60,000 per year or Rs. 5,000 per month. So, if your needs are higher, then you ought to ensure that you have alternative sources of income. You can opt for an immediate annuity plan from LIC like LIC Jeevan Akshay that will pay you additional income. If you are in the 20-50 age group, you can also put the money in pension funds in India like the PPF, EPF, NPS, etc. in addition to opting for mutual funds or postal pension schemes. You can buy a LIC Varishtha Pension Bima Yojana plan the next time it is re-launched.
Inflation will ensure that the real value of money will decrease over time. That means what you can buy today for Rs. 100 will be more than what you can buy next year for the same amount. In pension terms, it means that you will need more money to sustain your current lifestyle. Also, with retirement and age, certain expenses will increase. For instance, you may end up traveling more or will need more regular health checks. This will increase your monetary requirements and will increase your costs.
Just as you will factor in an increase in expenses, you need to deduce how much your cost of living will decrease. You may, for example, not have to pay off a house loan anymore. Other factors such as regular travel costs (from home to office and back) will reduce. You will also be eating out less as you will spend more time at home and will likely prefer a healthier lifestyle.
As mentioned, give yourself some extra money for travel and entertainment. With the improvement in healthcare services and more awareness of health, people are opting for healthier living. This means you will be likely to be as sprightly at 80 as you are at 40 or 50. This may translate into more holidays and more entertainment expenses than when you are working. You may join clubs or sports or go for international holidays. Take these costs into account when you decide how much you need.
Healthcare costs are a big expense and with private care becoming more preferred due to the quality of services, these costs will only increase in the future. Everything from regular checkups to surgeries will be more expensive in the future. Take these factors into account when you choose an annuity plan like LIC Varishtha Pension Bima Yojana.
Experts suggest that people ought to have more than one source of income at old age to minimize risks. Accordingly, choose an annuity besides LIC Varishtha Pension Bima Yojana like LIC Jeevan Akshay. Also, save money for a pension over your working life in pension schemes such as PPF, EPF, and NPS, traditional life insurance endowment policies, mutual funds, and so on to make sure, you have multiple streams of revenue coming in.
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