LIC Bima Bachat vs Fixed Deposit

With the availability of several insurance products in the market wherein, you can invest and get guaranteed returns on your investments, you may get confused in selecting the most suitable one. Among different types of investment options, the two most popular plans are LIC Bima Bachat Plan and Fixed Deposit. Although LIC Bima Bachat is a guaranteed return insurance scheme and on the other hand FD is a pure investment that lets you invest at different tenures.

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Fixed Deposit Investment – An Overview 

Fixed deposits are pure investment schemes in which you can invest for a fixed term as per your requirements and receive good returns on your invested amount at the time of maturity. Banks and other financial organizations offer Fixed Deposit (FD) schemes and you can secure an extensive range of benefits by investing in this option. FD offers you higher returns compared to what you receive on your savings account. 

Generally, banks do allow premature withdrawal before a maturity period but, in FD the returns are assured and you are also allowed to withdraw money in case of need or emergencies. The accrued interest can be claimed as monthly or yearly or at the time of maturity of the investment. The investment tenures are also flexible i.e., from 7 days to 10 years. 

LIC Bima Bachat Policy – An Overview

LIC Bima Bachat is a participating, non-linked, and single premium money-back plan that offers life coverage, in addition, to return on your investment in a money-back form. The plan is mainly 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 provides financial security against death during the policy tenure along with paying survival benefits at specific tenures during the plan tenure. 

LIC Bima Bachat vs 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 LIC Bima Bachat plan: 

LIC Bima Bachat vs Fixed Deposit
Parameters Fixed Deposits LIC Bima Bachat Plan
Tenure  Fixed Deposits are suitable for long-term and short-term investments i.e., from 1 year to 5 years. The LIC Bima Bachat offers maturity and guaranteed benefits for 9, 12, and 15 years of the policy term. So it is a long-term investment plan.  
Eligibility  Residents, HUF, partnership and sole proprietorship organizations, trust accounts, and limited companies are eligible for a regular FD.  Maximum Entry Age: 15 years  Minimum Entry Age: 50 years for 9,12 and 15 years 
Investment  You can initiate investment with a minimum amount of Rs.1000 and there is no upper limit for investment.  The minimum installment payment starts from Rs.5000 for monthly, Rs.15000 for quarterly, Rs.25, 000 for half-yearly, and Rs.50, 000 for yearly. 
Based on the investment amount, the bank computes the interest. The more you invest in Fixed Deposit, the good returns you will get in long tenure.  In this, you can avail returns on your investment as maturity benefit or survival benefit at the end of a policy term. 
Taxation  FDs does not offer any benefits on tax  One can avail of tax benefits in a LIC Bima Bachat policy as per the prevailing laws of the Income-tax Act, 1961. 
Loan  In this, you can avail Loan against FD, which is a type of secured loan where buyers pledge their FD as security and receive a loan in return  LIC Bima Bachat is the money-back plan that offers a loan facility. A loan against LIC policy is provided at 9 percent per year payable half-yearly. 

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C applies. 

Benefits of Investing in Fixed Deposits and LIC Bima Bachat Plan 

Fixed deposits and LIC Bima Bachat Plan – Benefits
Fixed Deposits LIC Bima Bachat Plan
  • FDs help you to save for a fixed term 
  • It offers you a high rate of interest on your savings as compared to the interest rate you get while investing in a savings account. 
  • You receive assured returns on your investment. 
  • You can choose options to pay interest such as at maturity, yearly, or monthly based on the tenure you select.
  • You can invest in multiple FDs 
  • Different banks offer different FD rates. 
  • Get tax benefit on premium paid and maturity payouts under section 80 C and section 10(10D) of the Income Tax Act, 1961. 
  • LIC Bima Bachat Plan provides risk cover and takes care of your loved ones. 
  • You can choose different policy term options i.e., 9 years, 12 years, and 15 years. 
  • Death benefit, survival benefit, maturity benefits, and loyalty additions are also available under this scheme. 
  • Availability of riders to enhance the coverage. 

Wrapping It Up!

If fixed returns are your expectations, then FD is a smart decision for investment though you might not receive any tax benefits. Even in the case of regular income from your investment, FD is a good option. LIC Bima Bachat is also an ideal plan as it is a single premium money-back policy and offers a death benefit and maturity benefit. Always go for an investment option that suits your needs.

*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:-
++Returns are 10 years returns of Nifty 100 Index benchmark

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