Press Release regarding the Varishtha Pension Bima Yojana 2017
Government of India
Cabinet
24-January-2017 14:12 IST
Varishtha Pension Bima Yojana – 2017
The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its post-facto approval for launching of Varishtha Pension Bima Yojana 2017 (VPBY 2017). It is a part of Government’s commitment for financial inclusion and social security.
The scheme will be implemented through Life Insurance Corporation of India (LIC) during the current financial year 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. The scheme will provide an assured pension based on a guaranteed rate of return of 8% per annum for ten years, with an option to opt for pension on a monthly / quarterly / halfyearly and annual basis. The differential return, i.e., the difference between the return generated by LIC and the assured return of 8% per annum would be borne by Government of India as subsidy on an annual basis.
VPBY-2017 is proposed to be open for subscription for a period of one year from the date of launch.
Salient features about the Varishtha Pension Bima Yojana 2017
(1) Varishtha Pension Bima Yojana 2017 will be implemented through Life Insurance Corporation of India (LIC) during the current financial year.
(2) The objective of VPBY is to provide income security to elderly persons aged 60 years.
(3) Varishtha Pension Bima Yojana 2017 will provide an assured pension based on a guaranteed rate of return of 8 per cent for 10 years.
(4) Senior citizens can opt for pension on a monthly/quarterly/half-yearly or annual basis under the Varishtha Pension Bima Yojana 2017.
(5) The government will pay to LIC the differential return, which is the difference between the return generated by the insurer and the assured return of 8 per cent per cent, as subsidy on an annual basis.
(6) Varishtha Pension Bima Yojana 2017 will be open for subscription for a period of one year from the date of launch.
(7) The maximum amount that can be invested under the scheme is up to Rs. 7.5 lakh.
(9) The 8 per cent interest paid under the Varishtha Pension Bima Yojana qualifies as a good investment option for senior citizens. State Bank of India (SBI) currently pays only 7 per cent interest rate to senior citizens on fixed deposits with maturity between 5 to 10 years.
The Senior Citizen Savings Scheme, which is a small savings scheme for seniors of five years, currently offers 8.5 per cent interest. The maximum sum that can be invested is Rs. 15 lakh.
(10) The investment in the Varishtha Pension Bima Yojana is risk-free.
Loan against VPBY
The LIC Varishtha Pension Bima Yojana is very popular amongst senior citizens. Over 3.16 lakh policies of had been sold amounting to Rs. 6,095 crore.
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. However, 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.
LIC also allows policyholders to take a loan against their policy after the expiry of 5 years.
Medical check up
No medical check-ups required for LIC Varishtha Pension Bima Yojana.
Exit load for premature withdrawal
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 VPBY. If he chooses to withdraw the entire amount, he will receive a sum equal to 98% of the purchase price or premium.
In other words, 2% of the single premium will be the exit load charges
Mode of payout
The 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: 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
ECS, NEFT Payments
All payments are made by ECS or NEFT. This ensures that the person receives the sum they need easily without having to go through the trouble of encashing a cheque or a demand draft.
Lock-in period, Policy Termination or Surrender Benefit
LIC Varishtha Pension Bima Yojana has a lock in period of 15 years.
Annuitants 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.
Proof of age
LIC is entitled to call for proof of age at any time. If a wrong date has been entered during the application of the plan, the correct date will be put in the policy.
The LIC VPBY will not be called into question simply because of the age of the assured person was incorrectly entered.
Income-tax benefits
Income tax benefit on Varishtha Pension Bima Yojana is entitled for deduction as per Section 80CCC of the Income Tax Act, 1961.
Documents Required
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 the policy, the pensioner should submit the following documents:
(i) Discharge form
(ii) Original policy document
(iii) Proof of medical treatment of pensioner or his / her spouse if the policy is surrendered within the lock in period of 15 years
(iv) 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:
(i) Claim forms: These should be in format specified by LIC
(ii) Original policy document
(iii) NEFT mandate form: Claimant should provide all necessary bank details including bank name, account number, account type and IFSC code
(iv) Proof of death or proof of title: Claimant can submit whichever document is applicable
(v) Proof of age: This is required if the proof of age of the pensioner is not mentioned under the policy
FAQs relating to the LIC Varishtha Pension Bima Yojana
These are the Frequently Asked Questions (FAQs) about the VPBY which have been answered by experts.
LIC Varishtha Pension Bima Yojana pdf
The entire scheme and policy conditions are available for download in pdf format from LIC’s official website