Don’t know whether to choose LIC Bima Bachat or a Fixed Deposit? Read our comparison guide LIC Bima Bachat vs Bank FD!
What is a Fixed Deposit (FD)?
A fixed deposit, or FD, is a savings option offered by banks and non-banking financial companies (NBFCs) that allows customers to invest a lump sum of money for a predetermined period at a fixed interest rate. This type of investment is also known as a term deposit, as the period of investment can range from a minimum of 7-14 days to a maximum of 10 years.
The interest rate on an FD remains constant for the duration of the investment, regardless of changes in the market. At the end of the investment period, the customer receives the lump sum investment along with the interest earned. The interest can be paid out periodically or at the time of maturity, depending on the customer’s choice. However, withdrawing the money before maturity can result in a penalty. FDs are a popular and safe investment option for those looking to save money with a guaranteed rate of return.
What is a LIC Bima Bachat Policy?
LIC Bima Bachat is a type of insurance plan that requires a single premium payment and provides both life coverage and investment returns. It is a participating plan, which means that the policyholder is entitled to receive a share of the profits made by the insurer. The plan is non-linked, which means that the returns are not dependent on the performance of the stock market.
The policy term for this plan is 9, 12, or 15 years and the premium amount is determined based on the policy term and the age of the policyholder. The plan provides financial protection in case of the policyholder’s death during the policy term, as well as regular money-back payments at specified intervals during the plan tenure. This plan is designed to offer a combination of life coverage and investment benefits to policyholders.
LIC Bima Bachat vs Fixed Deposit
| Features | LIC Bima Bachat | Fixed Deposit |
| Investment Type | Life Insurance + Investment | Investment Only |
| Premium/Payment | Single premium payment | Lump-sum or periodic payment |
| Tenure | 9, 12, or 15 years | As per chosen tenure |
| Liquidity | Limited liquidity with penalties for early withdrawals | High liquidity with penalties for early withdrawals |
| Risk | Some degree of market risk | No market risk |
| Tax Benefits | Tax benefits on premiums paid and returns received | Tax benefits only on investments made |
| Life Coverage | Provides financial protection in case of death during the policy term | No life coverage |
| Rate of Return | Varies based on policy and market performance | The fixed and predetermined rate of interest |
| Purpose | Offers a combination of investment and life coverage | Ideal for those looking to save money with guaranteed returns |
What Are the Benefits of LIC Bima Bachat Policy?
LIC Bima Bachat policy provides several benefits to policyholders, including loyalty additions, survival benefits, maturity benefits, and death benefits:
- After completing a tenure of five years, the policyholder is eligible for loyalty addition. On survival till the end of the policy tenure, the policyholder is entitled to a survival benefit of 15% of the Sum Assured. At maturity, the policyholder receives the Single Premium paid plus any loyalty addition accumulated during the policy tenure.
- In the unfortunate event of the Life Insured’s death during the policy tenure, the policy provides death benefits. If the Life Insured dies within the first five years of the policy, the Sum Assured is paid. However, after five years, the Sum Assured and any accumulated loyalty addition are paid as Death benefits. Additionally, there is a high sum assured discount available under the LIC Bima Bachat plan
- Policyholders can also enjoy income tax benefits under Section 80C on the premium paid for the policy and under Section 10(10D) on the claims received. Overall, the LIC Bima Bachat policy provides financial security and ensures that policyholders’ families are taken care of in the event of an unfortunate incident.
What Are the Benefits of Fixed Deposit?
The benefits of investing in a fixed deposit plan are as follows:
- They offer a higher interest rate than a regular savings account, which means your savings will grow faster.
- FDs provide guaranteed returns on your investment, giving you peace of mind knowing that your money is safe and secure.
- Depending on the length of your investment, you can choose to receive interest payments monthly, yearly, or at maturity.
- You can invest in multiple FDs to diversify your savings portfolio. It’s worth noting that different banks offer different FD rates, so it’s important to compare and choose the best option that suits your needs.
Don’t miss out on the benefits of a fixed deposit plan! Open a Freo Savings Fixed Deposit today and start saving for your future.
Final Thoughts
If you are looking for a reliable and smart investment option with fixed returns, then a fixed deposit (FD) can be a smart choice. Although FDs do not offer tax benefits, they are a good option for regular income from your investment. If you’re seeking alternatives to traditional investments, you may want to consider the LIC Bima Bachat plan. It is a single premium money-back policy that offers both death and maturity benefits. It’s important to choose an investment option that aligns with your financial goals and needs.
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