Varishtha Pension Bima Yojana, launched in 2003 and operated by the Life Insurance Corporation (LIC) of India, is a one-time premium pension plan that provides senior citizens a monthly pension within 30 days of paying the first policy premium. People aged 60 and older can purchase this policy and get a monthly pension of up to Rs 5,000 or Rs 60,000 annually. Here are some key features of Varishtha Pension Bima Yojana.

Free Look & Lock-In Period

The purchaser will get a 15-day free-look period during which the subscriber can review the policy features and, if unsatisfied, unsubscribe from the plan. There are no charges if the subscriber returns the policy within the free-look period, and the premium paid will be returned. The scheme has a 15-year lock-in, but it can continue life-long upon providing a life certificate.

Premature Exit & Returns

The scheme allows premature exits under exceptional circumstances like a terminal illness or total incapacitation which may require urgent money. However, a premature exit will attract a 2 per cent penalty on the accumulated corpus, and the rest of the money will be returned to the policyholder. Varishtha Pension Bima Yojana offers policyholders a 9.3 per cent interest on investments annually, as such, it could be great pension option for senior citizens.

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Loan Facility

Policyholders can receive pensions monthly, quarterly, half-yearly, and annually. Additionally, they can avail of a loan facility if they have held the policy for at least three years. After three years of opening the account, the policyholder can take a loan of up to 75 per cent of the policy purchase price. The loan’s equated monthly instalments (EMIs) will be deducted from the annuity.

Tax Benefit

Contributions towards Varishtha Pension Bima Yojana get tax relief up to Rs 1.5 lakh in a financial year under section 80C of the Income-tax Act, 1961.

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Refund

Moreover, if the policyholder dies, LIC will return the purchase price to the beneficiary, who could be a spouse or other nominee. In case of any outstanding loan repayment issues, LIC will deduct the unpaid loan amount and the interest accrued from the purchase price before returning the remaining balance.