Varishtha Pension Bima Yojana – Govt Pension Scheme for Senior Citizens in 2022

Varishtha Pension Bima Yojana – Varishtha Pension Bima Yojana is a retirement plan aimed towards senior folks. It is a pure retirement plan in which the pensioner receives a lifetime payment in the form of an immediate annuity. An annuity is a set of payments paid to a person on a regular basis. The Indian government resurrected this programme in 2014-2015, citing the plan’s recent popularity, according to the finance ministry. A total of 6095 crore and 3.16 lakh policies were sold under the Varishtha Pension Bima Yojana programme. Because it is for older adults, the entry age is 60 years old, and the premium payment method is single pay.

Banks slashed interest rates on fixed deposits after demonetization. Prime Minister Narendra Modi announced the reintroduction of this scheme with a guaranteed interest rate of 8% for ten years in order to protect the interests of senior citizens (over 60 years of age) against lowering interest rates.

Features of LIC Varishtha Pension Bima Yojana Plan

• As previously stated, this is an immediate annuity plan in which you pay a single premium and the annuity payout begins right away.

• If you are 60 or older, you are qualified for this plan, which does not require a medical exam.

• Surrender Value is an option available to policyholders who have been diagnosed with a terminal or serious disease.

• The LIC Varishtha Pension Bima Yojana Plan has multiple payout options. You have the option of receiving payments monthly, quarterly, semi-annually, or annually. From the date of receipt of the premium, payments will be made every 1 month, 3 months, 6 months, and 1 year.

• Monthly Payout – If you choose the monthly payout option, you will be paid a set amount each month as well as the purchase price.

• Semi-Annually – If the policyholder chooses the semi-annual payment option, they can start by paying 65,430 or 6,54,275.

• Yearly Payout – This is the amount paid to the policyholder on an annual basis. You can start with a payment of 63,960 or 6,39,610 if you choose this option.

• National Electronic Fund Transfer (NEFT) or Electronic Clearing Service (ECS) is the method of payment (ECS). Senior citizens have found the internet way of transfer to be more convenient.

• The policyholder can surrender the Varishtha Bima Yojana policy after 15 years of investment and receive a return of the purchase price, which is the premium price paid at the time of policy purchase.

• A policyholder can take out a loan against their insurance after three years of lock-in.

Benefits of Varishtha Bima Yojana Plan

• The policyholder is entitled to guaranteed regular assured income under the Varishtha Bima Yojana Plan. This sum is credited to the policyholder’s bank account directly.

• Your named nominee/beneficiary will get the entire invested money that the pensioner used to take out the policy as a death benefit if the policyholder dies.

• According to Section 80CCC of the Income Tax Act of 1961, you will be eligible for income tax benefits.

• Other investment instruments, including mutual funds, provident funds, endowment plans, and so on, can be simply integrated with the LIC Varishtha Bima Yojana Plan.

• ECS or NEFT is used to make all pension payments. As a result, there is no necessity to cash the check or receive a demand draft.

• It provides a guaranteed pension with an annual interest rate of 8%, which is higher than many other senior citizen pension plans.

• Policyholders can get their pension in a variety of ways, such monthly, half-yearly, quarterly, or yearly.

• Policyholders have 15 days from the date of receipt of the insurance to cancel it. In this situation, the premium amount will be reimbursed once stamp duty expenses have been deducted.

• It also provides death benefits. The premium money will be reimbursed to the nominee or spouse when the policyholder passes away.

• The policyholder has the option of taking out a loan against his or her insurance.

• After three years, the policyholder can borrow against the VPBY.

• It provides income tax advantages, as the premiums paid are tax-free under Section 80C of the Income Tax Act. The pension sum, on the other hand, will be taxable.

Varishtha Bima Yojana Eligibility Conditions and Other Restrictions

• Minimum Entry Age: 60 years (completed)

• Maximum Entry Age: No limit

The policyholder must also submit the Existence Certificate at specified time intervals in the proforma of LIC.

Documents Required Varishtha Bima Yojana

• The policyholder must complete a ‘Application form/proposal form’ that includes an accurate medical history, as well as proof of address and other KYC papers. At specific times, LIC Varishtha Pension Bima Yojana pensioners must also present Existence Certificates. These certificates must be submitted using the LIC proforma.
• When a LIC Varishtha Pension Bima Yojana policy is surrendered.
• The following documents must be submitted by LIC Varishtha Pension Bima Yojana pensioners:
  • Original policy document
  •  Discharge form
  • If the policy is surrendered within the 15-year lock-in term, proof of medical treatment for the retiree or his or her spouse is required.
  • If this aspect has not been clarified previously, proof of age is required.

• For payment of death benefits under LIC Varishtha Pension Bima Yojana, documents that need to be submitted include:

Forms for submitting claims: These should be in the format that LIC specifies.

• Documentation of the original policy
• Form for a NEFT mandate is as follows: The claimant must give the relevant bank information, such as the name of the bank, account number, account type, and IFSC code.
• Claimants can produce either proof of death or proof of title, depending on which is more appropriate.
• Evidence of age: If the pensioner’s proof of age is not specified in the policy, this is necessary.

Mode of Varishtha Pension Bima Yojana Premium Payment

Under the VPBY, there are four ways to pay for premiums.

The following are the four premium payment options available through the LIC VPBY:

• Monthly: The annuity amount will be paid to the insured on a monthly basis. When compared to the other ways of payment, the premium payment is smaller.
• Quarterly: The annuity amount will be paid to the policyholder every three or four months throughout the year.
• Half-Yearly: The insured will get the annuity every six months on a half-yearly basis.
• Annually: The policyholder will get a yearly annuity payment. However, as compared to other payment methods, the premium payment amount is substantial.

Pension Amount under Varishtha Pension Bima Yojana 

 The minimum and maximum pension amount for each pension period are as follows:

Varishtha Pension Bima Yojana Application Process

Eligible pensioner can apply for the Varishtha Pension Bima Yojana by following the proceedings stated below:

• Download the form and fill it up with the mandatory information.
• The form should be supported with the required documents, namely:
  • Medical Reports
  • Address Proof
  • KYC documents
  • Existence Certificate
• The form should be duly filled up and submitted to the concerned Life Insurance Corporation of India(LIC).

Varishtha Pension Bima Yojana Policy Surrender Period

When the pensioner surrenders the policy, the entire purchase amount of the policy will be refunded to him. After a period of 15 years, the policy is usually surrendered. If the retiree suffers from a catastrophic or terminal illness, the policyholder might claim the purchase price before the age of 15. The pensioner receives 98 percent of the whole purchasing price in this situation.

FAQs for Varishtha Pension Bima Yojana