LIC Varishtha Pension Bima Yojana 

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.

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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 crore 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years, though LIC allows policyholders to withdraw the sum they need by paying a fee (called exit load) on the amount withdrawn.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. 

Key Features of LIC Varishtha Pension Bima Yojana

It is an Immediate Annuity Plan with single premium option where the annuity starts immediately after premium payment from the next chosen date.

  • No medical check-ups required for LIC Varishtha Pension Bima Yojana.
  • LIC Varishtha Pension Bima Yojana provides for early availability of Surrender Value if the annuitant is diagnosed with any Critical or Terminal Illness.
  • The policyholder only needs to pay a sum equal to 2% of the amount withdrawn as exit load under the LIC Varishtha Pension Bima Yojana. If they choose to withdraw the entire amount, they will receive a sum equal to 98% of the purchase price or premium. In other words, 2% of the single premium will be exit load charges
  • LIC Varishtha Pension Bima Yojana annuitants can choose from various modes of payout, viz., monthly, quarterly, semi-annually and yearly. The first of the payouts for each of these frequencies will be respectively 1 month, 3 months, 6 months and 1 year from the date of receipt of premium.
    • Monthly: Under this mode, the LIC Varishtha Pension Bima Yojana annuitant will receive an amount per month. People can invest up to Rs. 6.66 lakh if they want to opt for a monthly payout. The minimum purchase price starts from Rs. 66,665
    • Quarterly: Here the senior citizens holding a LIC Varishtha Pension Bima Yojana policy will receive a sum per quarter in a year, i.e. they will receive an annuity every three months or four times in a year. The LIC Varishtha Pension Bima Yojana annuitants can pay an amount from Rs. 66,170 to Rs. 6,61,690 if they want to receive a quarterly payment
    • Semi-Annually: LIC allows people who want to opt for a half yearly payment to receive the same from the LIC Varishtha Pension Bima Yojana. The annuitants can pay any amount from Rs. Rs. 65,430 to Rs. 6,54,275 to start receiving the annuity on a semi-annual basis
    • Yearly: The annual sum is paid by LIC once a year and helps the policyholder to receive a comparatively large sum of money that they can use to pay large expenses or for other reasons such as travel. People can pay up to Rs. 6,39,610 to opt for an annual payout. The minimum sum starts from Rs. 63,960
    • All payments are made by ECS or NEFT that ensures the person receives the sum they need easily without having to go through the trouble of encashing a cheque or a demand draft.
    • LIC Varishtha Pension Bima Yojana has a lock in period of 15 years.
    • Annuitants of LIC Varishtha Pension Bima Yojana can surrender their policy after a period of 15 years and they will be refunded the purchase price; i.e. the premium they had paid for the policy when they took it 15 years ago.
    • Policyholders can opt for a loan against the policy after a period of 3 years. The amount of loan taken under LIC Varishtha Pension Bima Yojana will be up to 75% of the policy amount. Interest rates will vary and will be based upon the rates decided by LIC. The policy will be assigned to LIC during the tenure of the loan.
    • 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 less any charges for stamp duty.
    • LIC may call for proof of age at any time and if a wrong date has been entered during the application of the plan, the correct date will be put in the policy. LIC Varishtha Pension Bima Yojana will not be deemed to be called into question simply because of the age of the assured person was incorrectly entered.

Benefits of LIC Varishtha Pension Bima Yojana

Annuity payouts will be paid as per the frequency chosen immediately after the premium paid. LIC has provided an upper limit of Rs. 60,000 p.a. for the LIC Pension Plans Varishtha Pension Bima Yojana

  • Regular assured income is received under the LIC Varishtha Pension Bima Yojana. Pensioners do not have to worry about whether they will receive a cheque or a demand draft as the amount is deposited in the policyholders account
  • On death, the Purchase Price is refunded under LIC Varishtha Pension Bima Yojana. That means that the beneficiaries get back the amount that was used by the pensioner to take out the policy
  • Income tax benefit on the premium paid as per Section 80CCC of the Income Tax Act
  • LIC Varishtha Pension Bima Yojana is initiated by the government and thus stands on equal footing with other government pension schemes for reliability
  • LIC Varishtha Pension Bima Yojana can be easily combined with other pension schemes such as PF, endowment policies, mutual funds, etc. to get a stable income per month
  • You receive Rs. 5,000 per month for a single premium of Rs. 6,66,665 or an annual sum of Rs. 60,000 for a premium of Rs. Rs. 6,39,610 under LIC Varishtha Pension Bima Yojana. In practical terms, this means a return of 9% and above. Considering the current interest rates for fixed deposits or savings accounts, the returns on your money from LIC Varishtha Pension Bima Yojana is much higher than these other options

LIC Varishtha Pension Bima Yojana – Product Specification:




Entry Age (Last Birthday)

60 years

No limit

Purchase Price



Yearly Annuity Payout



Annuity Payout Frequency

Monthly, quarterly, half-yearly, yearly

LIC Varishtha Pension Bima Yojana – Details About Premium

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


Rs. 63,960

Rs. 6,39,610


Rs. 65,430

Rs. 6,54,275


Rs. 66,170

Rs. 6,61,690


Rs. 66,665

Rs. 6,66,665


LIC Varishtha Pension Bima Yojana – Sample Pension Rates

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.



Pension Rates


Rs. 93.8069 pa


Rs. 91.7045 pa


Rs. 90.6767 p.a.


Rs. 90.0000 p.a.


LIC Varishtha Pension Bima Yojana – Annuity Rates

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





















LIC Varishtha Pension Bima Yojana – Policy Details

Grace Period: 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 pleased 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.


Loan is available under the plan after the completion of 3 year up to a maximum of 75% of the Purchase Price. The interest on the loan will be recovered from the annuity payments.

LIC Varishtha Pension Bima Yojana – Documents Required

On signing up and during the tenure of LIC Varishtha Pension Bima Yojana

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:

  • 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

For payment of death benefits under LIC Varishtha Pension Bima Yojana

The documents that need to be submitted include:

  • Claim forms: These should be in format specified by LIC
  • Original policy document
  • NEFT mandate form: Claimant should provide all necessary bank details including bank name, account number, account type and IFSC code
  • Proof of death or proof of title: 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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Introduction to Annuities

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 travelling 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.

How to Choose an Annuity

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.

Check your needs

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.

Take into account possible increase in expenses

Inflation will ensure that 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 travelling more or will need more regular health checks. This will increase your monetary requirements and will increase your costs.

Take into account possible decrease in expenses

Just as you will factor in 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 any more. 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.

Give yourself some extra money to travel or entertainment

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 are 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 factor

Healthcare costs are a big expense and with private care becoming more preferred due to 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.

Don’t rely on a single source of income

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 pension over your working life in pension schemes such as PPF, EPF and NPS, traditional life insurance endowment polices, mutual funds and so on to make sure, you have multiple streams of revenue coming in. 

LIC Varishtha Pension Bima Yojana -FAQs

Q. What is an annuity?

An annuity like LIC Varishtha Pension Bima Yojana provides a regular income, whether yearly, half-yearly, quarterly or annually to take care of living expenses.

Q. What are the types of annuities?

There are different types of annuities like immediate annuities such as LIC Varishtha Pension Bima Yojana and LIC Jeevan Akshay, deferred annuities like LIC New Jeevan Nidhi, annuities for limited periods such as 5 years or 20 years, increasing life annuity, and decreasing life annuity, among others. LIC Varishtha Pension Bima and Yojana can also be described as a life annuity with return of premium as the entire purchase price is returned to the beneficiaries on demise of the pensioner.

Q. Which is better – immediate annuity or deferred annuity?

Immediate and deferred annuity cannot be distinguished in terms of which one is better than the other as each has its own unique benefits. Immediate annuity as the name suggest starts paying immediately while deferred annuity is for later payment. LIC Varishtha Pension Bima Yojana and LIC Jeevan Akshay are examples of immediate annuity while LIC New Jeevan Nidhi is a deferred annuity plan.

Q. How do I know which annuity is best for me?

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 for example has a return percentage of 9% and above and is one the best annuity plans in terms of returns.

Q. What factors do I keep in mind while selecting an annuity?

Before deciding on an annuity plan, chalk 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. Be sceptical of the ones that promise you the moon as they may have hidden clauses and restrictions that an agent or financial adviser does not mention. Check out the available plans with PolicyBazaar’s custom comparison tables after you have input your requirements. Understand what the best plans offer in detail before you invest.

Q. How do I invest in an annuity?

Most companies have made it extremely simple to invest in an annuity. All you need to do is fill the application form, give the necessary support documents such as age of proof, cancelled 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?

How you receive your annuity depends on what options the company provides and the preference 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 your bank account, and you do not have to follow up for the payments.

Q. Will the money last for my lifetime?

LIC Varishtha Pension Bima Yojana is 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?

LIC Varishtha Pension Bima Yojana returns the purchase price to the beneficiary on death of the pensioner. That means if you had invested Rs. 10,000, then your spouse will receive back the said amount on your demise.

Q. What documents do my spouse or beneficiary need to show to claim back the amount?

Under the LIC Varishtha Pension Bima Yojana, your spouse or beneficiary needs to submit the claim forms with LIC. They will also need to submit the original policy document, the NEFT mandate from their bank to show where the amount will be credited, the proof of title or proof of death, and any age certificate to verify the age of the pensioner. LIC may ask for some additional details to process the request. 

Latest News- LIC Varishtha Pension Bima Yojana 

Government Re-Launches LIC Varishtha Pension Bima Yojana

The Re-launch of Varishtha Pension Bima Yojana announced by the Prime Minister Narendra Modi on the New Year’s Eve has been approved by the cabinet. LIC will be implementing the scheme with an objective to provide social security to the senior citizens of India. LIC Varishtha Pension Bima Yojana provides an assured pension, offering a guaranteed higher interest rate of return of 8% per annum for 10 years along with an option to receive pension on monthly, quarterly, half-yearly and yearly basis. 

The plan (Varishtha Pension Bima Yojana) was previously introduced in July 2003 by National Democcratic Alliance (NDA) to provide pension cover to senior citizens aged above 55 years. However, the plan was withdrawn after one year. Mr. Arun Jaitley, the current finance minister of India re-launched this scheme in year 2014-2015 budget. In the union 2017-18, he has again assured the re-launch of this scheme with a higher interest rate. 

Varishtha Pension Bima Yojana offers pension in four different modes i.e. monthly, quarterly, half-yearly and annually. The annuity of different modes varies from Rs500-5000 for monthly mode, Rs1,500-15,000 for quarterly mode, Rs3,000-30,000 for half-yearly mode and Rs6,000-60,000 for yearly mode.  Now, the annuity amount is expected to be higher with the increase in the rate of interest.

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