LIC's Pension Plan - Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a government-backed pension scheme offered by the Life Insurance Corporation of India (LIC). This scheme is designed to provide financial security and stability to senior citizens during their retirement years.
The PMVVY scheme was launched in May 2017, as part of the government's efforts to provide social security to senior citizens. The scheme is available to all Indian citizens aged 60 years and above, and it offers guaranteed returns on investment.
Features of Pradhan Mantri Vaya Vandana Yojana (PMVVY):
- Guaranteed Returns: PMVVY offers a guaranteed return of 7.4% per annum for a policy term of 10 years. The returns are payable monthly, quarterly, half-yearly or annually, as per the policyholder's choice.
- Pension Payment: The pension payment is made through NEFT or Aadhaar Enabled Payment System (AEPS) directly to the policyholder's bank account.
- Loan Facility: The policyholder can avail a loan against the PMVVY policy after completion of three policy years. The loan amount can be up to 75% of the policy's surrender value.
- Surrender Value: The policyholder can surrender the policy at any time after completion of three policy years. The surrender value payable will be 98% of the purchase price.
- Death Benefit: In case of the policyholder's death during the policy term, the purchase price will be refunded to the nominee.
- Tax Benefits: The premium paid towards PMVVY is eligible for tax benefits under Section 80C of the Income Tax Act. The pension received is taxable as per the policyholder's income tax slab.
Eligibility for PMVVY:
- The scheme is available to all Indian citizens aged 60 years and above.
- The policy can be purchased either singly or jointly.
- The minimum purchase price for the policy is Rs. 1,56,658, and there is no maximum limit.
- The policy can be purchased by paying a lump sum amount.
Additional Information on PMVVY:
- Policy Term: The policy term for PMVVY is 10 years. The policyholder can choose the frequency of pension payment, i.e., monthly, quarterly, half-yearly, or yearly, based on their convenience.
- Purchase Price: The minimum purchase price for PMVVY is Rs. 1,56,658, and there is no maximum limit. The purchase price is required to be paid in a lump sum at the time of purchasing the policy.
- Maturity Benefit: On the completion of the policy term of 10 years, the policyholder will receive the purchase price along with the final pension installment.
- Premature Exit: In case of an emergency, the policyholder can opt for a premature exit from the policy. In such cases, 98% of the purchase price will be refunded to the policyholder.
- Nomination Facility: The policyholder can nominate a person to receive the death benefit in case of their demise.
- No Medical Test: No medical test is required to purchase PMVVY. The policy is available on a guaranteed basis, without any medical examination.
- Maximum Investment Limit: There is no maximum limit for investment in PMVVY. However, the pension payment is restricted to a maximum of Rs. 1,00,000 per annum per policy.
- Government Backing: PMVVY is backed by the Government of India. The scheme is administered by the Life Insurance Corporation of India, which is a trusted and reliable name in the insurance industry.
Explain With A Simple Example
Let's say Mr. Sharma is 60 years old and looking for a safe investment option to generate a regular source of income during his retirement years. He decides to invest in LIC's Pension Plan - Pradhan Mantri Vaya Vandana Yojana (PMVVY).
Mr. Sharma invests Rs. 2,00,000 in PMVVY by paying a lump sum amount at the time of purchasing the policy. The policy term is for 10 years, and Mr. Sharma opts for a monthly pension payment of Rs. 2,200.
During the policy term, Mr. Sharma will receive a guaranteed return of 7.4% per annum, which translates to a monthly pension payment of Rs. 2,200 for 10 years.
At the end of the policy term, Mr. Sharma will receive his purchase price of Rs. 2,00,000 along with the final pension installment. In case of his demise during the policy term, the purchase price will be refunded to his nominee.
If Mr. Sharma wants to exit the policy prematurely, he can do so after completion of three policy years. In such cases, he will receive 98% of the purchase price as a surrender value.
Overall, PMVVY provides Mr. Sharma with a safe and reliable investment option to generate a regular source of income during his retirement years.
Conclusion:
PMVVY is an attractive investment option for senior citizens looking for a regular source of income during their retirement years. The scheme offers guaranteed returns, loan facility, surrender value, death benefit and tax benefits. It is a government-backed scheme, which makes it a safe and reliable investment option. Senior citizens should consider investing in PMVVY to secure their financial future.
FAQ
Q. Who is eligible to invest in LIC's Pension Plan - Pradhan Mantri Vaya Vandana Yojana (PMVVY)?
PMVVY is designed for senior citizens aged 60 years and above.
Q. What is the policy term for PMVVY?
The policy term for PMVVY is 10 years.
Q. What is the minimum and maximum purchase price for PMVVY?
The minimum purchase price for PMVVY is Rs. 1,56,658, and there is no maximum limit.
Q. What is the pension payment frequency available under PMVVY?
The policyholder can choose the frequency of pension payment, i.e., monthly, quarterly, half-yearly, or yearly, based on their convenience.
Q. What is the guaranteed return rate under PMVVY?
The guaranteed return rate under PMVVY is 7.4% per annum.
Q. Is there any maximum limit for investment in PMVVY?
There is no maximum limit for investment in PMVVY. However, the pension payment is restricted to a maximum of Rs. 1,00,000 per annum per policy.
Q. Is medical examination required to purchase PMVVY?
No, there is no medical examination required to purchase PMVVY.
Q. What is the maturity benefit under PMVVY?
On the completion of the policy term of 10 years, the policyholder will receive the purchase price along with the final pension installment.
Q. Can a policyholder nominate a person to receive the death benefit under PMVVY?
Yes, the policyholder can nominate a person to receive the death benefit in case of their demise.
Q. Is PMVVY backed by the Government of India?
Yes, PMVVY is backed by the Government of India. The scheme is administered by the Life Insurance Corporation of India, which is a trusted and reliable name in the insurance industry.
