Pradhan Mantri Vaya Vandana Yojana

Pradhan Mantri Vaya Vandana Yojana

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Pradhan Mantri Vaya Vandana Yojana Plan

Old age considered as the toughest part of your life. You not only become weak physically but also financially dependent. Though it is said that after retirement one can lead his/her life in relax with the support of regular pension but the actual fact is completely opposite. As you grow old, your health requirements increase as human body at this stage is prone various biological problems, which in turn require medical treatments. These days going for a medical treatment means a hole in your pocket, thus, in order to provide one financial support LIC (Life Insurance Cooperation) has come up with a new Pradhan Mantri Vaya Vandana Yojana.

Pradhan Mantri Vaya Vandana Yojana is a single premium payment pension plan. This pension plan offers an option to one to either choose the amount of pension or the Purchase Price. The all new Pradhan Mantri Vaya Vandana Yojana was launched on 4th may 2017 and is available for sale till 3rd may 2018. This is a plan is a government subsidised pension scheme which provides an assured return of 8% per annum, which is paid monthly to the pensioner surviving during the policy term of 10 years. Also this plan is exempted from goods and service tax and is available online for online purchase too.

Eligibility criteria and other restrictions

  • The minimum entry age for this plan is 60 years (completed).

  • There is no maximum entry for this plan.

  • Policy term for Pradhan Mantri Vaya Vandana Yojana is 10 years.

  • Pension mode- yearly, half-yearly, quarterly and monthly.

  • Minimum purchase price for: monthly is Rs. 1,44,578 , quarterly is Rs. 1,47,601 , half-yearly is Rs. 1,49,068 , and yearly is Rs. 1,50,000.

  • Maximum purchase price for: monthly is Rs. 7,22,892 , quarterly is Rs. 7,38,007 , half-yearly is Rs. 7,45,342 , and yearly is Rs. 7,50,000.

  • Minimum pension amount is: Rs. 1,000 per month, Rs. 3,000 per quarter, Rs. 6,000 per half-year and Rs. 12,000 per year.

  • Maximum pension amount is: Rs.5,000 per month, Rs. 15,000 per quarter, Rs. 30,000 per half-year and Rs. 60,000 per year.

  • The maximum pension amount criteria in this plans is for an entire family. The family comprises pensioner, spouse and dependents.

Mode of pension payment

The modes of pension payment are monthly, quarterly, half-yearly & yearly. The pension payment shall be through NEFT or Aadhaar Enabled Payment System.

Benefits payable under PMVVY

  • Maturity benefit- on the successful completion of the term of the policy, a purchase price and final pension instalment is given to the pensioner.

  • Death benefit- in the occasion of unforeseen death of the pensioner during the term policy, the purchase price is returned to the nominee.

  • Pension payment- if the pensioner survives throughout the policy then the pension is paid according to the pension payment mode selected.

Surrender value

Surrender value is available under this policy. The policyholder can exit the policy term before maturity under exceptional circumstances like the Pensioner requiring money for the treatment of any critical/terminal illness of self or spouse. The Surrender Value payable in such cases can be 98% of Purchase Price.


Loan facility is available under Pradhan Mantri Vaya Vandana Yojana. One can avail this facility after the completion of 3 years of policy term. The maximum loan can be granted should be 75% of the purchase price. The rate of interest to be charged for loan amount would be determined from time to time by LIC. Loan interest will be recovered from pension amount payable under the policy.

Free look period

If a policyholder is not satisfied with the “Terms and Conditions” of the policy, he/she may return the policy to the Corporation within 15 days (30 days if this policy is purchased online) from the date of inception of the policy stating the reason of objections.
In this case the policyholder will get the entire amount after deducting the charges for Stamp duty and pension paid (if any).


In case of suicide there will no exclusion under this policy and full purchase price is paid.

Tax benefit

There are no tax benefits under this policy and or on the pension about received through this policy. The pension you receive is taxable. This would be added to your income and taxed at your marginal tax rate, similar to fixed deposits.


The demerits of this policy are:

  • The amount is locked-in for 10 years, so the money may not be available if required urgently (other than in case of illness).

  • The pension is not adjusted in inflation. Assuming inflation at 7%, the purchasing power of Rs.5,000 would be reduced to Rs.2,500 in 10 years.

Thus Pradhan Mantri Vaya Vadana Yojana (PMVVY) is a good and simple product especially for aged people looking for regular income after retirement.