Commission for LIC Agents Selling PMVVY Policy: Clarification and Details

The role of Life Insurance Corporation of India (LIC) agents in selling the Pradhan Mantri Vaya Vandana Yojana (PMVVY) policy, a pension scheme specifically for senior citizens, garners significant interest. Below, we provide a detailed overview of the commission structure for LIC agents, along with relevant details and clarifications based on the latest guidelines from LIC.

Commission Structure for PMVVY Policy

As of the latest update in August 2023, the commission structure for LIC agents selling the PMVVY policy is outlined as follows:

First Year Commission

Agents typically receive a commission of around 2% of the premium paid in the first year. This commission is a standard practice in the initial phase of the policy, providing agents with an incentive to sell the scheme.

Subsequent Years

It is important to note that there is generally no renewal commission for PMVVY policies. This is because the policy is a single-premium plan, meaning that no further premiums are required after the initial investment. This structure allows for a more straightforward sales process but does not offer ongoing commission incentives.

It should be acknowledged that commission rates may vary based on specific agreements, promotions, or changes in policy by LIC. Always refer to the latest guidelines from LIC or consult with an LIC agent for the most accurate and up-to-date information.

Clarification and Additional Details

The commission earned by an LIC agent for selling a PMVVY policy is not as generous as some may believe. In fact, the commission is relatively low. According to a source, the commission for selling the PMVVY policy is 0.1%, which translates to approximately Rs. 1500 for an investment of Rs 15,00,000. This translates to an investment of Rs. 1.5 million, with a commission of Rs. 1500.

Notable points to consider include:

The plan is facilitated by the Central Government to benefit senior citizens. There is no Goods and Services Tax (GST) applied to the investment under this policy. The pension received is taxable based on the policyholder's income tax slab. LIC of India would not deduct any Tax Deduction at Source (TDS) on the pension payable.

Despite the relatively low commission, the PMVVY policy is an important initiative for senior citizens, offering them a secure monthly, quarterly, half-yearly, or yearly pension. The value of this scheme lies in its stability and the fact that it is backed by the government.

Introduction of SeWA platform and Impact on Agent Commission

The SeWA (Self Service Web Application) platform has been introduced by LIC to provide a more efficient and transparent process for agents and policyholders. Through this platform, agents can register and manage their personal details, receive notifications, and access other essential services. However, the introduction of SeWA has not directly affected the commission structure for the PMVVY policy. Agents continue to earn the same commission as specified above.

The SeWA platform is a service expense that is covered by the government, meaning there is no additional commission involved for agents.

Conclusion and Recommendation

LIC agents can play a crucial role in promoting the PMVVY pension scheme among senior citizens. While the commission might be lower than some would hope, it remains a valuable opportunity for agents to contribute to a government-backed initiative that benefits many elderly individuals in need of financial security.

For those interested in becoming an agent, it is recommended to:

Review the latest guidelines from LIC. Understand the full terms and conditions of the PMVVY policy. Register and activate the SeWA platform for more efficient service. Encourage unemployed or underemployed individuals to join the agent program, as it offers a chance for financial growth and contribution to society.

By doing so, agents can contribute to the well-being of senior citizens while also growing their own business.