Life Insurance Corporation, popularly known as LIC is an Indian public sector life insurance company with strong brand equity and market presence. LIC offers huge range of life insurance products to cater to diverse range of individual’s insurance needs. Various government launched schemes are offered through LIC. Pradhan Mantri Vaya Vandana Yojana is one such pension scheme introduced by Indian government for the benefit of senior citizens.
Pension plans, which are also known as retirement plans that lets you invest part of your savings over a certain period of time and helps you avail steady income post your retirement. There are various types of pension plans offered by LIC. Pradhan Mantri Vaya Vandana Yojana is exclusively designed for senior citizens.
Pradhan Mantri Vaya Vandana Yojana is a pension scheme introduced by the government of India exclusively for senior citizens aged 60 years and above. The scheme offers 8% guaranteed interest for 10 years. The scheme is also exempted from the GST, i.e. the goods and services tax. Life Insurance Corporation has been given sole right to operate the scheme. LIC has started offering Pradhan mantri Vaya Vandana Yojana from its launch date 4th May, 2017. The scheme will remain available for investment till 31st March, 2020. Let’s take a look at the features of Pradhan Mantri Vaya Vandana Yojana.
(Note: Pradhan Mantri Vaya Vandana Yojana got revamped post the changes proposed in Union Budget 2018. Changes were with respect to limit of investment and the scheme extension.)
In the current falling interest scenario, Pradhan Mantri Vaya Vandana Yojana looks attractive for many retired senior citizens with small retirement corpus and limited means. Pradhan Mantri Vaya Vandana Yojana is suitable for you, if -
Let’s take look at the eligibility requirements for buying Pradhan Mantri Vaya Vandana Yojana
|Entry age in years||60||No limit|
|Policy term in years||10|
Eligibility requirement for the amount of investment and pension pay-out differs depending on the mode of pension payment chosen by you. Here is the eligibility requirement :
|Mode of pension payment||Minimum purchase price (in INR.)||Minimum pension (in INR.)||Maximum purchase price (in INR.)||Maximum pension (in INR.)|
(Note: Upper cap on the maximum purchase price is per senior citizen.)
Here are some of the benefits offered by this government’s flagship scheme.
|Payment mode||Annual rate per INR. 1000|
There are few documents to be furnished while buying Pradhan Mantri Vaya Vandana Yojana. Here is the list of documents required.
The scheme offers benefits in both of the below scenarios.
Original purchase price or the actual amount invested by the pensioner is paid back to beneficiary/nominee as death benefit.
For example, Mr. Sharma aged 60 years has invested INR. 15,00,000 in Pradhan Mantri Vaya Vandana Yojana, for which he is receiving monthly pension of INR. 10,000 (8% of 15 lakhs/ 12 months). Let’s say, he dies when he is 66 years old. In that case, the monthly pension pay-out would be discontinued from the date of death and the amount invested by him i.e. INR.15 lakhs would be paid out his nominee.
On completing the policy period of 10 years, original purchase price or the actual amount invested by the pensioner is paid back to him/her as survival benefit.
For example, if we take Mr. Sharma’s case, at the end of policy term i.e. when he is at the age of 70 years, he would receive back his original investment of INR. 15 lakhs as survival benefit. Till the end of the policy term, he would continue to receive his monthly annuity of INR. 10000 at the end of every month.
Suicide: There shall be no exclusion on count of suicide and full purchase price (invested amount) shall be payable.
Pradhan Mantri Vaya Vandana Yojana can only be bought from LIC either offine or online through LIC website. Here is how you can purchase the scheme through either of the two modes.
In case the pensioner dies during the policy term, death claim should be initiated by the nominee. Once the claim application with relevant documents are submitted, the request will be processed.
Here are the documents required to be submitted in death claims
In case of accidental or unnatural death, some of the additional documents may not be furnished
However, at the end of the policy term maturity claims would be initiated by LIC only.
Yes, you can cancel your investment in Pradhan Mantri Vaya Vandana Yojana within the ‘free-look period’ stated in the policy. The scheme comes with free-look period of 15 days (for offline policies) or 30 days (for online policies). Hence, if you are not satisfied with the ‘’terms and conditions’’ of the policy, you can cancel your investment within 15 days (30 days for online policy) from the date of receipt of the policy. However, you need to state the reason for cancellation of the policy. When you cancel, the total purchase price will be refunded back to you after deducting stamp duty charges and pension paid, if any.
Yes, you can! Pradhan Mantri Vaya Vandana Yojana allows you to take premature exit during the policy term of 10 years in an exceptional situations like needing the money for critical illness treatment or for the terminal illness care for self or spouse. The company would pay-out 98% of the purchase price on surrendering the policy mid-way.
1. You have invested INR. 12,00,000 at the age of 60 years in LIC’s Pradhan Mantri Vaya Vandana Yojana.
2. You would be receiving monthly pension of INR. 8,000.
Let’s say at the age of 67, you needed money for urgent treatment of some critical illness. On making premature exit under the scheme, you would be able to get :
- INR 11,76,000 (98% of INR 12,00,000.
No. Pradhan Mantri Vaya Vandana Yojana is not an annuity plan. The scheme comes with limited term pension offer. Hence, you would be receiving the regular steady pension income only during the policy period. Once the policy term of 10 years is completed, reinvesting offer can be considered only if the plan is available at that time. Interest rate on offer may also vary. Currently, Pradhan Mantri Vaya Vandana Yojana is available for investment only up till 31st March, 2020.
Earlier when the scheme was launched investment limit was capped at INR. 7,50,000 for a family. However, new changes are made in the year by increasing the investment limit to INR. 15,00,000. And also, limit applicable to the family as a whole is changed to per senior citizen.
Let’s say, you and your spouse both are senior citizen, then Pradhan Mantri Vaya Vandana scheme allows each of you to make INR. 15,00,000 investment in to the scheme. That means you and your spouse together can invest up to INR. 30,00,000.
Other LIC's Pension Plans