LIC FD Scheme : Life Insurance Corporation of India (LIC) is not just the largest insurance company in India, but it also offers a wide range of financial products that extend beyond insurance. Among its various offerings, LIC provides a Fixed Deposit (FD) scheme through its subsidiary LIC Housing Finance Limited. This scheme offers investors the opportunity to earn safe and consistent returns on their deposits, much like bank fixed deposits, but with slightly better interest rates.
In the current financial climate, where people are looking for secure investment avenues with guaranteed returns, the LIC Fixed Deposit Scheme is gaining attention for its reliability and attractive interest rates. Especially for conservative investors, including senior citizens, this FD scheme serves as a stable and rewarding investment option.
LIC FD Scheme : Interest Rates under LIC FD Scheme
LIC’s Fixed Deposit scheme offers interest rates ranging from 7.25% to 7.75% per annum for general investors. For senior citizens, the interest rates are even more appealing, ranging from 7.50% to 8.50% per annum, depending on the tenure and deposit amount. These rates are higher than many traditional banks, making LIC’s FD a preferred option for risk-averse investors.
Let’s take a look at some examples to understand the returns better:
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If an individual invests ₹1,00,000 for a tenure of 5 years at an interest rate of 7.75% per annum, they can expect to receive approximately ₹1,38,750 at the time of maturity.
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For senior citizens, the return on the same investment and tenure, at an 8.50% interest rate, would be approximately ₹1,42,500, giving them an edge in terms of passive income generation during retirement.
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If the investment is made for a 3-year term, the return at 7.75% would be about ₹1,23,250, demonstrating decent gains over a medium-term investment horizon.
It’s important to note that these returns are indicative and can slightly vary depending on the specific LIC Housing Finance FD plan you opt for and the compounding frequency.
LIC FD Scheme : Minimum and Maximum Deposit Limits
The LIC FD Scheme allows flexibility in terms of investment size. You can start your investment with as low as ₹50,000, making it accessible to small savers as well. The scheme also supports high-value investments up to ₹20 crore, making it suitable for institutional or high-net-worth investors.
Here’s an example for a lower amount:
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If an individual deposits ₹50,000 for 3 years at 7.25%, the maturity amount would be ₹60,875.
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The same investment for 5 years at 7.75% would yield ₹69,375, offering a good return for a secure investment.
This flexibility ensures that the scheme is tailored to meet the needs of a wide spectrum of investors, from salaried individuals to retirees and even business entities looking for short to medium-term parking of funds.
LIC FD Scheme : How LIC FD Scheme Compares to Bank FD Rates
While many commercial banks offer fixed deposit schemes, the interest rates offered vary considerably. Let’s compare LIC’s FD scheme with a few popular banks:
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Capital Small Finance Bank offers interest rates ranging from 3.50% to 7.15% per annum for general customers, and 4.00% to 7.65% per annum for senior citizens, depending on the tenure.
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Suryoday Small Finance Bank provides FD rates between 7.00% and 7.70%, which are competitive but still mostly lower than LIC’s offering for senior citizens.
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Aryavart Bank, a regional rural bank, offers FD rates between 5.05% and 5.50%, which are significantly lower than those provided by LIC Housing Finance.
Clearly, LIC’s FD scheme offers one of the highest fixed-income returns among well-known financial institutions in India, particularly for senior citizens.
LIC FD Scheme : Why Choose LIC’s FD Scheme?
There are several reasons why LIC’s Fixed Deposit scheme stands out in the crowded FD market:
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Higher Interest Rates: The interest rates are more attractive than most commercial banks, especially for longer tenures.
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Government-Backed Credibility: LIC is a government-owned entity, and its housing finance arm enjoys a high credit rating, ensuring the safety of your investment.
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Flexible Tenure: You can invest for durations ranging from 1 year to 5 years, which gives you control over your liquidity and returns.
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Senior Citizen Benefits: The FD scheme offers special higher rates for senior citizens, helping them generate better passive income during retirement.
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Reliable Returns: Being a non-market linked investment, you are protected from market volatility and can enjoy assured returns.
LIC FD Scheme : Things to Keep in Mind
Before investing in LIC’s Fixed Deposit Scheme, there are a few important things to consider:
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Premature Withdrawal: Like other FDs, premature withdrawal is allowed but may come with penalties or reduced interest rates depending on the terms.
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Tax Implications: The interest earned is taxable under the Income Tax Act, and TDS may be applicable if the interest income exceeds a specified limit.
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No Insurance Coverage: Unlike bank FDs that are covered under DICGC insurance for up to ₹5 lakh, LIC Housing Finance FDs may not be covered under such schemes, although they are rated highly for safety.
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Documentation: You will need basic KYC documents (Aadhaar, PAN, address proof) to open an FD with LIC.
How to Invest in LIC FD Scheme
If you’re interested in investing, here’s how you can proceed:
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Visit your nearest LIC Housing Finance branch or their official website.
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Consult a financial advisor or LIC agent to understand the best plan suited for your needs.
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Fill out the application form with KYC documents and deposit the amount via cheque, net banking, or other accepted payment modes.
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You will receive an FD receipt or certificate upon confirmation of your deposit.
Final Thoughts
The LIC FD Scheme by LIC Housing Finance is a reliable and rewarding fixed-income product suitable for investors who prioritize safety and stable returns. With interest rates up to 8.50%, especially for senior citizens, and the assurance of a reputed institution like LIC, this scheme is worth considering in your fixed-income portfolio.
However, as with any financial product, it’s advisable to consult with your financial advisor before making any investment decision. They can help assess your risk appetite, financial goals, and suggest the right tenure and amount for maximum benefit.
Whether you are planning for retirement, saving for a future goal, or simply want to park your funds securely, the LIC Fixed Deposit Scheme could be an ideal option for long-term and risk-free wealth accumulation.