Interest rate, eligibility, loans, tax benefits
Falling interest rates on Fixed Deposits (FDs) have hurt a large part of investors in the country, especially senior citizens. Those over 60 often prefer Bank FD as a safe and stable investment option. But bank FD yields are now less than 7 percent.
Here is an attractive investment option for seniors which gives more than 7% of return in a context of falling rates FD – Pradhan Mantri Vaya Vandana Yojana or PMVVY scheme. The Life Insurance Corporation of India (LIC) recently changed the interest rates of the PMVVY scheme. Launched in 2017, this retirement plan for seniors will benefit from a fixed interest rate for the 2020-21 financial year. The program will provide a guaranteed rate of return of 7.40% per annum in fiscal year 21. This plan will be available for sale for three fiscal years, until March 2023.
The program can be purchased offline as well as online at the LIC website. LIC is the only one authorized to manage the program which offers a total payment not exceeding ??15 lakh.
The policy has a 10-year term and for policies sold in the first fiscal year ending March 2021, the plan will offer a guaranteed rate of return of 7.40% per annum, but will be payable monthly for the term of 10 years. Seniors can receive a minimum pension of ??1,000 per month depending on the amount invested in the device. The maximum amount of the pension is limited to ??9,250 per month.
For policies sold during the next two fiscal years, the applicable guaranteed interest rate will be reviewed and decided at the start of each fiscal year by the government. The minimum investment has also been revised to ??1 56 658 for a pension of ??12,000 per year and ??1 62 162 to obtain a minimum pension amount of ??1000 per month as part of the plan.
The minimum purchase price for the monthly mode is ??1 62 162, ??1 61 074 for the quarterly pension, ??1 59 574 for the half-yearly mode and ??1 56 658 for the annual mode. The maximum pension that can be received under this scheme will be ??9,250 per month, ??27,750 per quarter, ??55,500 half-yearly and ??1,11,000 based on annual payments, said LIC.
The total amount of the purchase price for all policies under this plan and all policies underwritten under previous versions of the plan authorized for a senior must not exceed ??15 lakh.
The scheme can be purchased by a lump sum purchase price and the pensioner has the option of choosing either the amount of the pension or the purchase price. When purchasing the scheme, the pensioner can choose the monthly / quarterly / semi-annual or annual pension mode.
If the pensioner survives during the term of the policy, an arrears pension (at the end of each period depending on the mode chosen) will be payable, LIC said, adding that in the event of the death of the pensioner during the term of the policy , the purchase price will be refunded to the legal representative / heirs.
If the pensioner lives until the end of the policy, the purchase price and the last payment of the pension are payable.
The policy also allows loaning up to 75% of the purchase price after three years of insurance. The plan also allows for premature exit for the treatment of any critical / terminal illness of self or spouse and the cash value payable will be 98% of the purchase price.
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