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LIC Bima Bachat Vs Fixed Deposit
LIC Bima Bachat and Fixed Deposits are both popular low-risk investment options with guaranteed returns in India, offering safety and guaranteed returns. While LIC Bima Bachat is a single premium money-back life insurance plan with periodic payouts, Fixed Deposits provide fixed interest income over a chosen tenure. Both options differ in structure, benefits, liquidity, and tax implications; however, understanding LIC FD vs LIC Bima Bachat can help you make an informed decision that aligns with your financial goals.
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- LIC Bima Bachat vs Fixed Deposit
Read more about the difference between LIC Sanchay FD and LIC Bima Bachat Plan:
LIC Fixed Deposit Plan – An Overview
LIC of India offers a fixed deposit scheme called LIC HFL Sanchay, through its subsidiary, LIC Housing Finance Ltd. It offers guaranteed returns at fixed interest rates and flexible tenures ranging from 1 to 5 years. With this FD in LIC of India, Investors can opt for either cumulative (interest paid at maturity) or non-cumulative (monthly or periodic payouts) options, such as the LIC fixed deposit monthly income plan, which is ideal for those seeking regular income.
Under the Sanchay FD in LIC, there are options to take a loan, auto-renewal on maturity, and a nomination facility. The minimum investment starts at ₹20,000, with no upper limit. LIC FD interest rates vary by tenure and investor type, for example, a 1-year deposit may offer 6.70%, a 15-month deposit 6.75%, and select plans for senior citizens can go up to 7.75% per annum.
LIC Bima Bachat Policy – An Overview
LIC Bima Bachat is a participating, non-linked, and single-premium money-back plan that offers life coverage and pays survival benefits at set intervals during the policy term. At maturity, a single premium is returned along with loyalty additions, if applicable. The plan is available for 9, 12, and 15 years of the policy term. The amount of premium is decided based on the policy term and the life assured's age. The plan also provides financial security in an emergency with a loan facility. The plan also allows policyholders to enhance their coverage with optional riders. The plan is no longer available for purchase; however, existing customers can still enjoy all the benefits promised.
LIC Bima Bachat vs LIC Fixed Deposit – A Comparative Analysis
Fixed deposit is a smart option to invest in as it is specifically designed for savings and investment purposes. If you want to save and invest for the future, it is suggested to invest in FDs. The below table illustrates the quick comparison between Fixed deposits and the Bima Bachat LIC plan:
| LIC Bima Bachat vs LIC Fixed Deposit | ||
| Parameters | LIC Fixed Deposit | LIC Bima Bachat Plan |
| Tenure | 1, 1.3, 1.5, 2, 3, and 5 years | 9, 12, and 15 years |
| Eligibility | Residents, HUF, partnership and sole proprietorship organizations, trust accounts, and limited companies are eligible for a regular FD. | Minimum Entry Age: 15 years Maximum Entry Age: 50 years for 9,12, and 15 years |
| Min. Sum Assured | Annual Option: Rs. 20000 followed by multiples of Rs.1000 Monthly option: Rs. 2 Lac followed by multiples of Rs.10000 Quarterly Option: Rs 2,00,000 followed by multiples of Rs 10,000 | Rs. 35,000 for PT 9 years Rs. 50,000 for pt 12 years Rs. 70,000 for PT15 years |
| Taxation | Income tax will be deducted at source as per the Income Tax Act, 1961, at the applicable rates. | Tax exemption on premiums paid as per Section 80C and the claims received as per Section 10(10D) of the Income Tax Act. |
| Loan | Allowed up to 75% of the deposit amount. | Allowed up to 90% of the surrender value as on the loan sanction date. |
*All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C applies.
LIC Fixed Deposit and LIC Bima Bachat – Plan Benefits
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LIC Fixed Deposit Policy- Sanchay
The FD in LIC of India is a safe choice when comparing FD vs LIC for long-term savings. In addition to the following benefits, the LIC fixed deposit monthly income plan ensures steady income and financial stability.
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LIC Sanchay offers guaranteed fixed interest rates for 1 to 5 years.
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The deposit tenure is flexible, with 5, 10, or 15-year options.
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Premature withdrawal is allowed, though interest is adjusted accordingly in this LIC fixed deposit policy.
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Interest payouts are available monthly, quarterly, or at maturity.
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Auto-renewal is available with every LIC FD scheme, ensuring convenience and continuity.
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Nomination facility is included in the LIC FD plan for added security.
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Senior citizens enjoy higher LIC FD interest rates.
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LIC Bima Bachat Plan
The Bima Bachat Money Back Policy is ideal for those seeking returns and protection. It has the following benefits:
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The Bima Bachat LIC Plan provides life cover along with assured returns.
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It offers death, survival, and maturity benefits, including Loyalty Additions.
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The Bima Bachat Plan LIC policy includes rider options to enhance coverage.
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Under the Bima Bachat Plan, the single premium is returned at maturity with Loyalty Additions.
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Final payouts can be received in instalments.
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Nomination is available under the policy for added assurance.
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The LIC Bima Bachat also participates in LIC’s profits.
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Wrapping It Up!
If you're looking for fixed and predictable returns, the LIC Fixed Deposit is a wise investment choice. However, remember that there will be no tax benefits. On the other hand, the LIC Bima Bachat 916 plan is a unique combination of insurance and savings. While FD in LIC is ideal for short- to medium-term goals, LIC Bima Bachat 916 suits long-term planners who want the security of insurance and the benefit of assured returns. Ultimately, the best choice depends on your personal financial goals and risk appetite.
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FAQs
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Q: Is LIC Bima Bachat taxable?
Ans: The premiums paid under the Bima Bachat money back policy may qualify for tax deductions under Section 80C, and the maturity and survival benefits are usually tax-free under Section 10(10D), subject to policy conditions. -
Q: Can I add more money to an existing LIC FD monthly income plan?
Ans: No, you cannot add extra funds to an existing LIC fixed deposit. However, you can always open a new LIC FD scheme under the same name. Each deposit will be treated as a separate account. While the DICGC insures bank FDs up to ₹5 lakh, the LIC fixed deposit is rated AAA by CRISIL, which reflects the highest level of safety. -
Q: How do I know if my LIC FD interest is below the TDS threshold?
Ans: You can use a simple FD interest calculator or an income tax calculator to check if the total interest earned on your LIC fixed deposit exceeds the TDS threshold. This helps in estimating your tax liability beforehand. -
Q: How do LIC FD interest rates compare to bank FDs?
Ans: The LIC Fixed Deposit interest rates under the LIC Housing Finance FD are generally higher than those banks offer for similar tenures. This makes the LIC FD monthly income plan more attractive for investors seeking better fixed returns. -
Q: What is the death benefit of LIC Bima Bachat?
Ans: Under the LIC Bima Bachat money back policy, if the life assured passes away during the term, the nominee receives the Sum Assured on Death along with any applicable Loyalty Addition. -
Q: What is the maturity of Bima Bachat LIC Plan?
Ans: The Bima Bachat LIC plan matures after a term of 9, 12, or 15 years, depending on the option selected at the time of purchase. On survival till the end of the term, the insured receives the full maturity amount, including the single premium paid (excluding taxes) and Loyalty Addition, if any. You can check your returns using a Bima Bachat policy calculator. -
Q: What is the maximum tenure for NRIs under the LIC FD Monthly Income Plan?
Ans: According to current guidelines, NRI depositors can invest in the LIC FD scheme for a maximum tenure of three years. The deposit amount is not limited, making it flexible for high-value investments. -
Q: What happens if I don’t submit my PAN card while opening a LIC FD account?
Ans: If you open a LIC FD monthly income plan without providing your PAN card, a higher TDS rate of 20% will apply instead of the standard 10%. Additionally:
No TDS certificate will be issued
You won’t receive tax credit for the TDS deducted
All tax exemption certificates (like Form 15G/15H) will be invalid -
Q: What are the benefits of Bima Bachat on death?
Ans: In the event of the policyholder’s death, the Bima Bachat plan LIC pays out the higher of 1.25x the single premium or the basic sum assured, plus any Loyalty Addition (if applicable). -
Q: Is the Bima Bachat maturity amount taxable?
Ans: The Bima Bachat maturity amount is generally tax-free under Section 10(10D), provided the policy conditions are met. Additionally, policyholders can claim deductions under Section 80C for the single premium paid. -
Q: What is the interest rate of Bima Bachat?
Ans: Although not specified, the interest rates for the death benefit and maturity benefits payable in instalments are fixed by LIC. The loan interest rates are also declared by LIC and are determined at periodic intervals.
Different types of Plans
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
++Returns are 10 years returns of Nifty 100 Index benchmark
˜Top plans are based on annualized premium, for bookings made through https://www.policybazaar.com in FY 25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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