Pradhan Mantri Vaya Vandana Yojana: Everything you need to know

Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a pension scheme introduced by the Indian government in May 2017. This scheme is designed specifically for senior citizens aged 60 years and above and aims to provide them with a steady and regular source of income in their retirement years. PMVVY is administered by the Life Insurance Corporation (LIC) of India, and it offers an attractive interest rate and a guaranteed return of 7.4% per annum for a period of 10 years.

The scheme provides a pension payout on a monthly, quarterly, half-yearly, or yearly basis, depending on the preference of the policyholder. PMVVY is a non-linked, non-participating, and pension plan, which means that it does not involve any market risk, and the policyholders will receive a fixed rate of return throughout the policy tenure. This scheme has been received well by senior citizens as it provides them with financial security and helps them to live a dignified life in their retirement years.

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Benefits and Features of Pradhan Mantri Vaya Vandana Yojana

1. Regular Pension Payments: Under the PMVVY scheme, the policyholder can opt to receive pension payments monthly, quarterly, half-yearly or annually, as per their preference.
2. Guaranteed Returns: The scheme guarantees a fixed rate of return of 7.40% per annum for the policy term of 10 years, making it an attractive option for senior citizens looking for a stable income.
3. Maturity Benefit: At the end of the policy term, the policyholder will receive the purchase price (the amount invested in the scheme) along with the final pension payment.
4. Death Benefit: In case of the policyholder’s demise during the policy term, the purchase price will be returned to the nominee/beneficiary.
5. Loan Facility: The scheme allows policyholders to avail of a loan of up to 75% of the purchase price after completion of three policy years.
6. Surrender Value: Policyholders can opt to surrender the policy before the completion of the policy term, but only after the completion of three policy years. In such cases, the surrender value will be paid to the policyholder.
7. Minimum and Maximum Purchase Price: The minimum purchase price under the scheme is Rs. 1.5 lakh, while the maximum purchase price is Rs. 15 lakh.
8. Tax Benefits: The amount invested in the scheme is eligible for tax deduction that is under Section 80C of the Income Tax Act, subject to a maximum limit of Rs. 1.5 lakh per year.

How to Apply for Pradhan Mantri Vaya Vandana Yojana

Pradhan Mantri Vaya Vandana Yojana (PMVVY) can be applied for both online and offline. Here are the steps to apply for PMVVY:|

Online Application:

• Visit the official website of the Life Insurance Corporation of India (LIC) or any other insurance company offering PMVVY.
• Click on the ‘Buy Policy Online’ or ‘Apply Online’ option.
• Fill in the required details such as name, age, address, contact information, bank account details, etc.
• Upload the necessary documents such as age proof, identity proof, address proof, and photograph.
• Review and submit the application form.
• Make the payment for the purchase price online.
  

  Offline Application:

• Visit the nearest branch office of the Life Insurance Corporation of India (LIC) or any other insurance company offering PMVVY.
• Collect the application form from the branch office or download it from the official website.
• Fill in the required details such as name, age, address, contact information, bank account details, etc.
• Attach the necessary documents such as age proof, identity proof, address proof, and photograph.
• Submit the application form along with the required documents to the insurance company.
• Make the payment for the purchase price through a cheque or demand draft.

After the submission of the application form and payment, the insurance company will verify the details provided and process the application. Once the application is accepted, the policy documents will be sent to the policyholder. It is important to note that the documents required and the application process may vary depending on the insurance company offering PMVVY.

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Documents Required for Pradhan Mantri Vaya Vandana Yojana

To invest in Pradhan Mantri Vaya Vandana Yojana (PMVVY), a senior citizen needs to provide certain documents. Here are the documents required for PMVVY:

1. Age Proof: The policyholder needs to provide a valid age proof document such as Aadhaar Card, PAN Card, Passport, Voter ID, or Driving License. The minimum age for investment in PMVVY is 60 years.
2. Identity Proof: The policyholder needs to provide a valid identity proof document such as Aadhaar Card, PAN Card, Passport, Voter ID, or Driving License.
3. Address Proof: The policyholder needs to provide a valid address proof document such as Aadhaar Card, Passport, Voter ID, Driving License, or utility bills like electricity bill, water bill, etc.
4. Photograph: The policyholder needs to provide a recent passport size photograph.
5. Bank Account Details: The policyholder needs to provide the details of their bank account, such as the account number and IFSC code, for the purpose of receiving pension payments.
6. KYC Documents: The policyholder needs to complete the Know Your Customer (KYC) process, which involves submitting self-attested copies of their Aadhaar Card, PAN Card, and address proof.

It is important to note that the documents required for PMVVY may vary depending on the insurance company from which the policy is purchased. The policyholder may also be required to submit additional documents if deemed necessary by the insurance company.

Tax Benefits of Pradhan Mantri Vaya Vandana Yojana

1. Tax Deduction: The premium paid towards PMVVY is eligible for tax deduction which is under Section 80C of the Income Tax Act, 1961. The maximum deduction allowed under this section is Rs. 1.5 lakh.
2. Investment Limit: The minimum investment in PMVVY is Rs. 1.5 lakh, and the maximum investment limit is Rs. 15 lakh. The tax deduction will be available for the amount invested up to Rs. 1.5 lakh only.
3. Pension Income: The pension income received from PMVVY is taxable under the head ‘income from other sources’. The amount of tax payable will depend on the individual’s tax slab.
4. Maturity Benefits: The maturity benefits, including the purchase price and final pension payment, are exempt from tax.
5. Surrender Value: In case of policy surrender, the surrender value received by the policyholder is taxable in the year of receipt.
6. Nomination: The nominee, in case of the policyholder’s death, will receive the death benefit tax-free.

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Interest Rates of Pradhan Mantri Vaya Vandana Yojana

The interest rates for Pradhan Mantri Vaya Vandana Yojana (PMVVY) are fixed by the Government of India and are reviewed periodically. The current interest rate for PMVVY is 7.40% per annum for the policy term of 10 years. Here are some of the key points related to interest rates of PMVVY:

1. Guaranteed Returns: PMVVY offers guaranteed returns of 7.40% per annum for the policy term of 10 years. This makes it an attractive option for senior citizens looking for a stable income.
2. Rate Revision: The interest rates for PMVVY are reviewed periodically and are subject to change. The interest rate applicable at the time of purchase of the policy will remain fixed for the entire policy term.
3. Minimum and Maximum Purchase Price: The minimum purchase price under the scheme is Rs. 1.5 lakh, while the maximum purchase price is Rs. 15 lakh.
4. Pension Payment: The pension payments under PMVVY can be made monthly, quarterly, half-yearly or annually, as per the policyholder’s preference.
5. Loan Facility: Policyholders can avail a loan of up to 75% of the purchase price after completion of three policy years.
6. Surrender Value: Policyholders can opt to surrender the policy before the completion of the policy term, but only after the completion of three policy years. In such cases, the surrender value will be paid to the policyholder.

Overall, the interest rate of 7.40% per annum offered by PMVVY is considered attractive for senior citizens looking for a stable income source. The guaranteed returns and the tax benefits under Section 80C make PMVVY a popular investment option among senior citizens.

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FAQ’s

What is the policy term of PMVVY?

 The policy term of PMVVY is 10 years.

What is the maximum investment limit for PMVVY?

 The maximum investment limit for PMVVY is Rs. 15 lakhs per senior citizen.

Is it possible to surrender the PMVVY policy before the completion of the policy term?

 Yes, it is possible to surrender the PMVVY policy before the completion of the policy term. However, a surrender penalty may be applicable.

Conclusion: Pradhan Mantri Vaya Vandana Yojana

Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a popular investment scheme for senior citizens in India. The scheme offers a fixed and guaranteed return of 7.40% per annum for a policy term of 10 years. The scheme is offered by the Life Insurance Corporation of India (LIC) and several other insurance companies.

PMVVY offers several benefits, such as a regular pension income, a loan facility, a surrender value, and tax benefits that is under Section 80C. The scheme is easy to apply for and requires minimal documentation.

The scheme is especially beneficial for senior citizens who are looking for a steady and stable source of income in their retirement years. The guaranteed return and tax benefits make it an attractive investment option.

Overall, Pradhan Mantri Vaya Vandana Yojana is a reliable investment option for senior citizens in India, and one that can provide them with financial security and peace of mind.