March 21, 2023

Varishtha Pension Bima Yojana

The Government of India announced the revival of the Varishtha Pension Bima Yojana (VPBY) in the Union Budget 2014-2015. The VPBY is administered through the Life Insurance Corporation (LIC). The VPBY benefits senior citizens aged above 60 years and offers them income security with a guaranteed rate of return.

Under the VPBY, pensioners can buy a policy at the purchase price by paying a lump sum. After buying the policy, a pension will be payable monthly, half-yearly, quarterly, or annually. The pensioners can choose a pension payment frequency according to their convenience and needs.

Let us understand a bit more about this scheme in this article

Eligibility for VPBY

The LIC Varishtha Pension Bima Yojana is available for citizens aged above 60 years. There is no maximum age limit under this Yojana.

Features of VPBY

Below are the features of the LIC Varishtha Pension Bima Yojana:

1. The VPBY has a lock-in period of 15 years.

2. The policyholders can avail of a loan after the completion of three years up to a maximum of 75% of their purchase price. The loan interest will be recovered from the annuity payments.

3. In case of any critical illness, the policyholders can surrender this pension yojana within 15 years of opening. They will receive up to 98% of the single premium paid. If the policyholder surrenders the policy after the completion of 15 years, then they can get up to 100% returns on the single premium paid.

4. The policyholders have the option to cancel this policy within 15 days of receipt of the policy documents, provided there is no claim.

Mode of Premium Payment under VPBY

The four modes of payment under VPBY are as follows:-

1. The policyholder will receive the annuity amount monthly. The premium payment amount is less compared to the other modes of pay out - monthly

2. The policyholder will receive the annuity amount every three or four months a year – quarterly

3. The policyholder will receive the annuity on a half-yearly, i.e. once every six months- half yearly

4. The policyholder will receive an annuity amount yearly. However, the premium payment amount is large compared to the other payout modes – yearly

Benefits of VPBY

1. All pension payments are made by ECS or NEFT. Thus, there is no requirement to encash the amount through a cheque or receive a demand draft.

2. It offers an assured pension with an 8% guaranteed interest rate per annum, which is higher than many other senior citizen pension schemes.

3. The policyholders can opt for receiving the pension through different payout modes, i.e. monthly, half-yearly, quarterly, or yearly.

4. The policyholders can cancel the policy within 15 days from the receipt date of the policy. The premium amount will be refunded after deducting stamp duty charges in such a case.

5. It offers death benefits also. When the policyholder dies, the premium payment will be refunded to the nominee or spouse.

6. The policyholder can take a loan against the VPBY after three years.

7. It offers benefits on income tax, i.e. the premiums paid are exempted under Section 80C of the Income Tax Act. However, the pension amount will be taxable.

Documents Required for VPBY

The important documents required to subscribe to VYBY include the following:-

1. Accurate medical history.

2. Address proof.

3. KYC-related documents.

4. The policyholder must also submit the Existence Certificate at specified time intervals in the proforma of LIC.


1. What is an annuity in LIC Varishtha Pension Bima Yojana?

An immediate annuity plan under the LIC Varishtha Pension Bima Yojana plan is a guaranteed income plan where the annuitant receives regular income on a yearly, semi-annually, quarterly, or monthly basis.

2. What are the different types of annuities?

There are two kinds of annuities - immediate and deferred. An immediate annuity plan is where you will receive the annuity immediately post-payment of premiums. A deferred annuity plan is where the annuity is paid after a limited period as selected by the annuitant. The LIC Varishtha Pension Bima Yojana plan is an immediate annuity plan.

3. What are the different modes of payment under LIC varishtha pension bima yojana?

The four types of payment include monthly, quarterly, half-yearly, and yearly


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