Pradhan Mantri Vaya Vandana Yojna(PMVVY) makes senior citizens looking for a regular income source, and looking for investment plans with safe and decent returns. Now, there’s a good chance to invest in. This is an insurance cum pension scheme for senior citizens. It is a government backed scheme operated by Life Insurance Corporation(LIC), which serves one’s need for financial planning post retirement. This scheme is for individuals of more than 60 years of age. It gives senior citizens a guaranteed pension amount at a specified rate for a tenure of 10 years. The applicant must be a citizen of India and should have completed at least 60 years of age while entering this scheme. There is no maximum age limit for entering this scheme and the minimum policy tenure is 10years. 



Under the PMVVY scheme, individuals receive a fixed amount at the end of a certain period chosen by them for a period of 10 years.


This scheme initially provides a guaranteed rate of return of 7.4 per cent per annum and is therefore revised every financial year.


Individuals can opt for monthly, quarterly, half-yearly or annual payment options with the plan as per their financial needs and convenience. The first payment is performed immediately after the purchase of the plan through one’s chosen payment mode.


This scheme comes with a maturity benefit. Individuals receive a lump sum purchase price of the plan along with the last instalment. However, it is valid only on the survival of an applicant until the end of the policy tenure.


In the event of death of a pensioner during the policy term, his or her heir is entitled to receive an entire purchase amount as a claim on submitting the authentic documents.


Considering the financial needs to avail any critical situation, this scheme allows a pensioner to surrender the policy. In such a case, they are entitled to receive 98 per cent of the purchase value during the premature exit from the scheme.


After the purchase of this policy, if individuals are not congenial with the terms and conditions of the scheme they are allowed to return this scheme. In case of online purchase of policy, they are free to return it within 30 days of purchase and in case of offline purchase it is 15 days from the date of purchase. A reason of objection must be inserted while returning the policy.


After 3 years of purchasing the policy, individuals can also avail loan against this scheme. They can borrow a maximum of 75 percent of the purchase amount as loan. Interest calculated on loan is adjusted from the pension amount as per the chosen frequency of loan payment.


This scheme also comes with an unique exclusion to the return of the policy’s purchase price. Under this exclusion, the entire purchase price if payable if a policy holder commits suicide.

Individuals can buy this policy both online and offline from the Life Insurance Corporation of India. To purchase this scheme through the offline mode, individuals need to visit the nearest branch of LIC. After deciding the preferred purchase price one needs to fill up the application form and submit it along with the proper documents and the chosen amount. For the online application process one needs to visit the official website of LIC and can buy the policy under the “Buy policy online” header.

There is no income tax relaxation for the scheme. The returns are taxable. The difference between the interest guaranteed and the actual interest earned and the expenses related to administration shall be subsidized by the Government of India. The scheme is exempted from GST. Investing in these schemes means looking into the interest rates. In a falling interest rate scenario, if you stumble your investments then you are exposed to the risk of reducing the value of your money at a lower rate of interest as the time passes by. Individuals investing in this pension scheme should be careful about the important dates like the date of receipt, date of risk initiation, date of adding riders and the date when the policy was revived (if any).

Pradhan Mantri Vaya Vandana Yojana is a great investment scheme for senior citizens looking for a regular pension or income source post retirement. This scheme is an excellent alternative to traditional bank deposits. However, to invest in this plan one should have a considerable amount in hand. On the other hand, one should not forget that this investment plan is not as liquid as the bank fixed deposits. Do consider keeping some money in bank fixed deposits to meet emergencies and short term financial goals.

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Banking Professional with 16 Years of Experience. The idea to start this Blogging Site is to Create Awareness about the Banking and Financial Services.

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