LIC Housing Finance is among the most reliable term deposit providers. LIC offers several benefits to its depositors. For example, it offers high-interest rates, has flexible tenures and also offers loans against the deposits. In this article, we have covered about LIC FDs and its interest rates in detail.
LIC FD Interest Rates April 2021
|Tenure||Regular FD Interest Rates||Senior Citizen FD Interest Rates|
Features of LIC Housing Finance Fixed Deposit
LIC term deposit schemes offer significant returns. Following are the key features of LIC term fixed deposits:
The LIC Housing Finance FD tenure ranges between 1 year to 5 years. Once invested, one cannot change the LIC Housing Finance FD investment tenure. However, one can opt for premature withdrawal, though this attracts some penalty.
Minimum and Maximum Deposit Amount
The minimum amount of deposit for LIC FDs is INR 2,00,000 for the monthly option and INR 10,000 for the yearly option. There is no limit on the maximum investment amount for the deposit. Additional investments can be done in multiples of INR 10,000 for monthly deposits and INR 1,000 for yearly deposits.
LIC FD Interest Rate and Preferential Interest Rates
LIC Housing Finance FD interest rates range between 5.50% and 5.60% for regular citizens, and the tenure range being 12 months to 5 years. Also, LIC offers preferential interest rates for senior citizen depositors. The FD rates for senior citizens range between 5.65% to 5.75%.
Eligibility and Documents Required
To open an FD account in LIC Housing Finance, one has to be eligible. Following are the individuals that are eligible to invest in LIC FDs.
- Individuals, and for minors, a joint account along with a guardian
- Sole proprietors
- Partnership firms
- Joint-stock companies
- Hindu undivided families (HUF)
- Clubs, associations and trusts
To open a term deposit account in LIC Housing Finance, one needs the following documents.
The documents that one requires to invest in LIC FDs are
- FD application form
- 2 Photographs of the depositor
- PAN Card
- ID proof (Aadhar Card, PAN Card, Driving License, or Passport)
- Address proof (Aadhar Card, Electricity Bill, Telephone bill or any other utility bill)
- Age proof (Birth certificate, Discharge certificate PAN Card, or matriculation certificate)
Additional Payments and Safety
LIC Housing Finance does not allow depositing any additional amount in an existing fixed deposit. However, one can always open a new FD to deposit the additional amount. Under the Deposit Insurance Scheme of RBI, DICGC insures all LIC deposits up to INR 5,00,000. Furthermore, the LIC deposit schemes have an AAA or AA by the rating agencies. This indicates that the deposit has the highest safety.
Tax and TDS
Investment in LIC Housing Finance FD qualifies for tax saving under Section 80C of the Income Tax Act, 1961 if the tenure is for five years. Depositors can claim the exemption while filing income tax returns.
The interest that one earns on their LIC FD investments is taxable as per the depositor’s income tax slab rates. Furthermore, the LIC deducts a TDS of 10% (20% if PAN card isn’t submitted) in case the interest income exceeds INR 40,0000 (INR 50,000 for senior citizens).
To determine if the interest income from a LIC Housing Finance term deposit is above or below the TDS threshold limit, one can use the FD calculators available online. Also, depositors can estimate their tax liability using the Income Tax Calculator. Scripbox’s online Income Tax Calculator helps in estimating tax liability and is free to use.
Premature withdrawal and Loan against FD and Overdraft
LIC allows premature withdrawal of fixed deposits but with a penalty of 2% on the contracted rate of interest. LIC also allows investors to take a loan against their FDs to meet their financial requirements without having to break the FD. The loan is provided only against LIC’s fixed deposits.
Investors can take loans such as business loans, education loans, etc., against LIC FD. Also, they can estimate their loan EMI value using the loan EMI calculator. The loan EMI calculator works as a personal loan EMI calculator, car loan EMI calculator and also a home loan EMI calculator. The investor can also estimate the EMI value in multiple scenarios by changing the variables such as personal loan interest rate, home loan interest rate and car loan interest rate.
Nomination Facility and Auto Renewal
Depositors can nominate beneficiaries for their LIC FDs. Also, LIC offers an auto-renewal facility for deposits.
Though a PAN card isn’t mandatory while opening a LIC FD, there are few implications of not disclosing PAN details. The applicable TDS rate will be 20% instead of the usual 10%, as per the regulations of section 206AA. The LIC will not issue any TDS certificate. And all exemption certificates, including Form 15H and Form 15G, will be invalid.
LIC HFL Fixed Deposit Schemes: In Detail
Public Deposit Scheme (Sanchay)
The scheme is available for both cumulative and non-cumulative deposits.
- Tenure: 1 year to 5 years
- Minimum Deposit Amount: INR 10,000 for yearly option and INR 2,00,000 for monthly option.
- Maximum Deposit Amount: No Limit
- Interest Payout: Depositors can choose a suitable interest payment frequency, monthly or quarterly or annually.
- Joint Account: Available, a maximum of three members, can hold the account jointly.
- Loan Facility: LIC Housing Finance FD depositors are eligible for availing loan against their FD.
- Auto-Renewal Facility: Available
- Nomination Facility: Available
Does the LIC offer Recurring Deposits?
Yes, the LIC offers recurring deposit schemes. The LIC RD, also known as the Jeevan Saral scheme, is a recurring deposit plan that allows individuals to deposit a fixed amount of money monthly, quarterly, half-yearly, or annually for a specified period of time in return for a predetermined interest rate. Also, interest on LIC RDs are subject to change periodically. The LIC Recurring Deposit is a financial instrument that allows people to save money while still earning interest.
Frequently Asked Questions
What is the highest FD rate for LIC?
LIC Housing Finance term deposit interest rates range between 5.50% and 5.60% for regular citizens. For senior citizens, the interest rates range between 5.75% and 5.85% for a tenure of 18 months to 1 year. Moreover, senior citizens get a preferential rate of interest of 0.5% on their FDs. Also, the interest gets compounded quarterly, and the payout frequency depends on the investor’s choice – monthly, quarterly or annually.
The highest term deposit rate for LIC Housing Finance is 5.60% for a regular investor for the tenure of 5 years and above. For the same tenure, the senior citizen FD rate is 5.85%. Returns from LIC term deposits can be calculated using the fixed deposit calculator.
Is LIC fixed deposit safe?
LIC term deposit comes under the Deposit Insurance Scheme of RBI. The DICGC insures all LIC deposits up to INR 5,00,000. Furthermore, the deposit schemes of LIC have an AAA or AA by the rating agencies. This indicates that the deposit has the highest safety.
Is there any fixed deposit scheme in LIC?
LIC offers a term deposit called Public Deposit Scheme (Sanchay). The scheme is available for both cumulative and non-cumulative deposits with a tenure of 1 to 5 years. The FD rates range between 5.5% to 5.6%.
How many years FD will double in LIC?
An FD investment’s growth rate depends on the rate of interest of the investment. To find out in how many years an investment will double, one can follow the rule of thumb. They have to divide 72 with the interest rate to calculate the time in which the FD investment will double. For example, if the interest rate of Public Deposit Sanchay Scheme is 5.6%, then the investment will double in 12.85 years.
Which is best LIC or FD?
LIC is an insurance policy and every investor who has dependents needs to have an insurance policy. Whereas, FD is an investment vehicle that helps in earning returns. It will make the investor’s financial future secure. AN investor would need both an insurance policy as well an investment avenue to secure their future.