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An introduction to Varishta Pension Bima Yojana from LIC

Some years bank, the Life Insurance Corporation of India (LIC) launched a pension scheme guised as an insurance plan – the Varishta Pension Bima Yojana. Here’s everything you would want to know about this policy.

(Note: Varishta Pension Bima Yojana has been discontinued, and is no more available. It has been replaced by “Senior Citizen Savings Scheme (SCSS)“. This article is meant to educate you about the Varishta Pension Bima Yojana, which was very popular with seniors when it was under operation).

The Life Insurance Corporation of India (LIC) offers a very convenient insurance scheme for elderly people – it has a single premium, and the rate of return is guaranteed.

In effect, it works like a fixed deposit. Therefore, it is quite attractive for many people. Let’s understand the features of Varishta Pension Bima Yojana (also popularly known as Varishta Pension Scheme or Varishta Bima Yojana)

Age Requirement

The scheme is available only to people aged 55 years or more. This is the minimum age while starting this scheme. There is no upper limit / ceiling on the entry age.

Minimum and Maximum Deposit Amount

This is the premium amount for this single premium policy. But since this insurance policy acts more like a fixed deposit (FD), it is more popularly called the “deposit” amount.

The minimum deposit required is Rs. 33,336, and the maximum deposit accepted under the scheme is Rs. 2,66,665.

Pension Options

You can choose to receive the pension monthly, quarterly, half yearly or yearly.

Rate of Return

The rate of return offered is 9% per annum, guaranteed. This is the yield if you choose monthly pension payment.

As the pension payment frequency reduces, the effective yield goes up. Thus, if you opt for the yearly pension payout option, the yield would work out to 9.38% per annum.

Limits on the Pension

The minimum monthly pension offered is Rs. 250, and the maximum monthly pension offered is Rs. 2,000. The pension depends on the amount originally deposited.

Income Tax

The pension earned through the Varishta Pension Bima Yojana is fully taxable. It would be merged with your income for that year, and would be taxed as per the prevailing IT slabs.

When does the pension start?

In this policy, you start receiving the pension immediately – you would receive your first pension installment in the first period following your deposit.

Thus, if you opt for monthly pension, you would start receiving your pension in the first month following your initial deposit. Similarly, if you opt for quarterly pension, you would start receiving your pension at the end of first quarter following your initial deposit.

Tenure / Duration

There is a lock-in period of 10 years for Varishta Bima Yojana. You can not withdraw your funds before 10 years. You can maintain the scheme for any duration after 10 years.

Loan Facility / Early Withdrawal

Early withdrawals are not allowed from the scheme. But you can take a loan of upto 75% of the original deposit amount after 3 years of the original deposit.

The rate of interest on such a loan would be determined by LIC at the time of giving out the loan.

Termination of scheme

The scheme terminates at the time of the death of the depositor (that is, the policy holder). At that time, the nominee / beneficiary gets the original deposit amount.

Is Varishta Bima Yojana for you?

The Varishta Bima Yojana offers a very good fixed return of 9% per year.

Also, since the Life Insurance Corporation of India (LIC) is a public sector undertaking (PSU) and is owned by the Government of India, the deposit amount and the interest are virtually risk free.

Therefore, if you are over 55 years old and need some periodic cash flow, definitely consider investing in LIC’s Varishta Bima Yojana.

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  1. Isn’t Varishtha Bima policy of LIC closed sometime back?

  2. Anonymous says:

    Hi Ashish,

    You are right – it has been discontinued. Thanks for pointing it out.

    I wrote this article so that people could know about this once popular scheme, but totally forgot to mention that it has been discontinued.

    Thanks again…

  3. Sandeep shinde says:

    my monthly income is 20000 i want pention plan pls sugges

  4. Anonymous says:

    Hi Sandeep,

    Pension plans are a good way of securing your future, and I am glad that you are thinking about it.

    However, since everyones financial and social background is different, it would not be possible for me to recommend one pension fund as the best fund available.

    You can find a good fund that suits your need by going to sites like that give comprehensive data about various funds available.

    One advise – look at the funds long term performance record, not the last 1 or 2 years returns.

  5. Rishi Gupta says:

    Can you please guide us for childrean plan, which one opt and why ?

  6. Anonymous says:

    Hi Rishi,

    It would help if you elaborate on which children’s plan you are talking about.

    In general, children’s plans come from mutual funds and insurers.

    When it comes to MFs, these plans are designed to be safe so that you can save up for your kids – these funds are more debt heavy, which means that the returns from them are more predictable and stable.

    Children’s plans from insurers are designed such that if something happens to you, a large sum is paid to your child – this provides for their good upbringing and education even in your absense.

    All said and done, children’s plans are just a variant of regular MFs / Insurance policies, so please go through the costs and benefits carefully before investing in them – you might find some regular plan more beneficial than a children’s plan.

  7. bholanath bhattacharya says:

    i like to have the email id of life insurance regarding varista pension jogana. i have found this policy very good for me.As i am away from my home town, i want to get a form for live certificate on line so that by printing it out, i can submit it in time.

  8. Hi Bholanath,

    Unfortunately, the Varishtha Pension Bima Yojana is not available any more – it was discontinued a few years back.

    It has been replaced by the Senior Citizen’s Savings Scheme (SCSS) – you can find the details here: All you wanted to know about Senior Citizen Savings Scheme (SCSS)

  9. I have already taken out this policy and also the interest amount comes to my SBI bank (Mumbai branch) account on time. I am thinking of shifting to my native- Gujarat and there also I have savings account with SBI. So I would like to get the interest of Varishtha Bima policy to directly come to my SBI, Gujarath branch account (instead of SBI – Mumbai branch). Is it possible to do so ? If so then what is the procedure? Kindly advise.

  10. Jagdish Bhatia says:

    Is there any stipulation or LIC circular that amount invested in Varishat Bima Pension Yojna can be withdrawn after a lock in period of 10 years. There is no indication of this on the policy document. I would appreciate, if a reference is provided.

  11. Shubhangi Shah says:

    What dose the famil get in case of death of the life assured .Payout already given by LIC are deducted while paying back the Purchase price

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