Varishtha Pension Bima Yojana – Complete Details
Varishtha Pension Bima Yojana is a new scheme that has been launched by government in Year 2017. Main aim of this scheme is to to provide social security during old age and protect elderly persons aged 60 years and above against a future fall in their interest income due to uncertain market conditions.
About Varishtha Pension Bima Yojana
LIC Varishtha Pension Bima Yojana is a senior citizen pension scheme as launched and approved by the Government and incorporated by LIC (Life Insurance Company).This scheme aims to provides a pension plan with annuity payouts like an Immediate Annuity plan for senior citizens.
Note that – 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 15August 2014 to 14 August 2015.
- The plan is only available for people above 60 years of age.
- 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years, though LIC allows policyholders to withdraw the sum they need by paying a fee (called exit load) on the amount withdrawn.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 plan offers a return of 9.3% per annum.
- The exit load is 2% of the amount taken out by the LIC Varishtha Pension Bima Yojana policyholder.
- LIC also people to take a loan against their policy after a period of 5 years.
Main Features of LIC Varishtha Pension Bima Yojana
- No medical check-ups required for Varishtha Pension Bima Yojana.
- 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- The policyholder only needs to pay a sum equal to 2% of the amount withdrawn as exit load under the Varishtha Pension Bima Yojana.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
- 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, 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. 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 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.
- 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 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 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.
Benefit 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 pension under the LIC Varishtha Pension Bima Yojana
- Regular assured income is received under the 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 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
- 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 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 Varishtha Pension Bima Yojana is much higher than these other options
LIC Varishtha Pension Bima Yojana – Quick Details:
|Entry Age (Last Birthday)||60 years||No limit|
|Yearly Annuity Payout||6000||60,000|
|Annuity Payout Frequency||Monthly, quarterly, half-yearly, yearly|
Varishtha Pension Bima Yojana – Maximum and Minimum Premium Amounts
Under the Varishtha Pension Bima Yojana plan, the amount of the single premium varies depending on how frequently the pension needs to be paid.
|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|
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.
|Yearly||Rs. 93.8069 pa|
|Half-yearly||Rs. 91.7045 pa|
|Quarterly||Rs. 90.6767 p.a.|
|Monthly||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||100,000||250,000||500,000|
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 Varishtha Pension Bima Yojana policy
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 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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