The lic fixed deposit for 5 years tenure for stable investments with guaranteed returns. The principal is frozen for 5 years when a lump payment is deposited. Fixed interest rates with quarterly or defined compounding benefit investors. Participants include individuals, Hindu Undivided Families (HUFs), and non-individual businesses with minimum and maximum investment limits. LIC Fixed Deposit for 5 years is a safe investment for risk-averse investors seeking regular earnings.
About LIC FD
LIC, a well-known insurance company, offers Fixed Deposits (FDs) as a safe investment. LIC FDs require investors to deposit a flat sum for a specific time, usually months to years. The set interest rate of this investment choice gives investors certainty and consistency.
LIC FD interest rates are set, but tenure affects them. Longer terms usually have more excellent rates. Interest is compounded quarterly or per investment agreement. Individual investors, Hindu Undivided Families (HUFs), and non-individual companies may invest in LIC FDs, subject to qualifying requirements.
Depending on their finances, investors may deposit any amount within the minimum and maximum limitations. LIC FDs should be kept until maturity, although early withdrawal is allowed. However, fines and interest rate adjustments may apply to such withdrawals.
LIC’s nomination feature lets investors choose candidates to collect deposit profits after their death. This helps investors and their families prepare financially.
Since LIC FD interest is taxable, investors must consider the tax consequences. Before choosing LIC FDs, carefully analyze the terms and circumstances and your financial objectives. Financial advisors may assist investors in making educated selections based on their needs and circumstances.
LIC fixed deposit for 5 years Interest rate
LIC Housing Finance offers fixed deposits under the ‘Sanchay Deposit’ brand name. The interest rates for LIC hfl fixed deposit for 5 years tenure are:
- 7.75% p.a. for the general public (aged below 60 years).
- 8.00% p.a. for senior citizens (aged 60 years and above).
These rates are applicable for both cumulative and non-cumulative deposits. Cumulative deposits earn interest that is compounded annually and paid out at maturity. Non-cumulative deposits pay interest annually on March 31st of each year.
Here are some other things to keep in mind:
- The minimum deposit amount for LIC Housing Finance FDs is Rs. 1,000.
- There is no maximum deposit limit.
- You can invest in LIC Housing Finance FDs online or through any of their branches.
LIC Housing Finance FDs are a good option for investors looking for a safe and secure investment with a competitive interest rate. They are also a good option for senior citizens, who can earn an additional 0.25% interest rate on their deposits.
Features of LIC Fixed Deposit
- LIC provides numerous tenure choices for fixed deposits, enabling investors to pick a time corresponding to their financial objectives. Tenures vary from months to years.
- Fixed Interest Rates: LIC Fixed Deposits provide consistent interest rates throughout the set duration. Investment returns are predictable due to stability.
- Individual investors, Hindu Undivided Families (HUFs), and non-individual companies may apply for LIC Fixed Deposits, subject to strict qualifying conditions.
- Minimum and Maximum Investment: Investors may pick deposit amounts within defined limitations, allowing flexibility depending on financial capabilities.
- Although fixed deposits are designed to be maintained until maturity, LIC allows for early withdrawals under specific situations. However, withdrawals may incur fines and interest rate changes.
- Nomination Facility: LIC lets investors choose a nominee to collect deposit profits upon the depositor’s death. Thus, money is transferred to the nominee smoothly.
- Tax Implications: LIC Fixed Deposit interest is taxable. Investors should consider tax effects while planning.
Benefits of LIC Fixed Deposit
- The interest rates on LIC Deposits provide investors with secure and predictable profits during the investment term.
- LIC Fixed Deposits are low-risk investments ideal for conservative investors seeking capital preservation.
- Financial Planning: The nomination function enables investors to prepare for the future and effortlessly transfer cash to their nominee upon death.
- Easy Investment: LIC Fixed Deposits provide a simple approach and acceptable minimum investment amounts, making them accessible to various investors.
- Flexible Tenure: With flexible tenure choices, investors may design fixed deposits to match short-term or long-term financial objectives.
Read the terms and circumstances, evaluate your financial objectives, and remain abreast of interest rates and policy changes before investing in lic hfl fixed deposit for 5 years tenure. Personal financial advice is available from financial advisors.
How do you invest in an LIC fixed deposit for 5 years?
Follow these procedures to invest in LIC Fixed Deposit for 5 years.
- Research and Information: Check LIC Fixed Deposit interest rates, terms, and conditions on their website or by visiting an agent.
- Obtain the LIC Fixed Deposit application form online or at a LIC office. Complete the form with precise information and attach your ID, address, and picture evidence.
- To apply, submit the completed form and accompanying documentation to the closest LIC branch or authorized collection location.
- Deposit Payment: Use a check or demand draft payable to “Life Insurance Corporation of India,” meeting the minimum investment criteria.
- Receive an acknowledgement or fixed deposit receipt containing the deposit amount, duration, interest rate, and maturity date.
- Use the nomination feature to designate a candidate for deposit proceeds in the event of death.
- Track maturity date and get frequent information from LIC on fixed deposit status.
- Maturity Redemption: Present the original receipt to redeem the fixed deposit and get the maturity amount.
Consult a LIC representative or customer service for tailored advice and compliance with LIC’s processes.
Eligibility to Open a lic fixed deposit for 5 years
The qualifying requirements for a 5-year LIC Fixed Deposit vary, so check the details. In general, the following people and organizations may open LIC Fixed Deposits:
1 Individuals:
- Resident individuals (Indian citizens)
- Non-resident Indians (NRIs) may also be eligible, depending on LIC’s policies.
2 Hindu Undivided Families (HUFs):
- HUFs, joint families with a common ancestor recognized under Hindu law, are usually eligible to open an LIC Fixed Deposit.
3 Non-Individual Entities:
- Entities such as trusts, charitable institutions, educational institutions, and corporate bodies may also be eligible, subject to LIC’s terms and conditions.
LIC’s qualifying standards may require applicants to show verification of identification, residence, and other information.
Documents Required to Open LIC FD
LIC (Life Insurance Corporation of India) Fixed Deposit requirements fluctuate; therefore, check with LIC or their website for the latest information. However, these are the typical LIC Fixed Deposit starting documents:
- Application Form:
- Complete the application form for the LIC Fixed Deposit. This form is usually available online or at LIC branches.
- Proof of Identity:
- Valid government-issued photo identification such as Passport, Aadhar Card, Voter ID, or Driver’s License.
- Proof of Address:
- Document confirming your residential address, such as Aadhar Card, Passport, Utility Bill, or Voter ID.
- Photographs:
- Passport-sized photographs of the applicant.
- PAN Card:
- Permanent Account Number (PAN) card is often required for income tax purposes.
- Nomination Form:
- If you wish to nominate someone to receive the proceeds in case of your demise, a duly filled nomination form may be required.
- For Non-Individual Entities:
- In the case of Hindu Undivided Families (HUFs) or non-individual entities, additional documents such as HUF declarations or trust deeds may be needed.
- NRI Documentation (if applicable):
- If you are a Non-Resident Indian (NRI), you may need to provide documents like a valid Indian Passport, NRI status proof, and Foreign Address Proof.
Note that the following list is illustrative, and needs may change. Before starting the procedure, it’s best to call LIC, visit an LIC office, or speak with an LIC agent for the latest information on LIC Fixed Deposit documents.
Tax on LIC Fixed Deposit for 5 years
The tax consequences of 5-year LIC fixed deposits are twofold.
1. Tax Deduction
Invest in a “Tax Saving FD” from LIC to claim a tax deduction of up to Rs. 1.5 lakh per year under Section 80C of the Income Tax Act. However, standard LIC FDs like your 5-year plan do not give this tax advantage.
2 Interest Income Tax
- Interest income from LIC fixed deposits, including the 5-year plan, is taxed under “Income from Other Sources.” Tax obligation is determined by total income and tax slab.TDS may be deducted on interest income above Rs. 40,000 annually (Rs. 50,000 for seniors). If you submit your PAN, TDS is 10%; otherwise, 20%.
- Your ultimate tax due will depend on your income. However, you may claim credit for TDS deducted when you submit your income tax return.
How to Calculate LIC FD Interest Rate
Here’s a breakdown of how to calculate the interest earned on an LIC FD:
1. Identify the Key Factors:
- Principal Amount: The initial Amount you deposit.
- Interest Rate: The percentage rate LIC offers for the chosen tenure and category (general public or senior citizen).
- Tenure: The time you invest the money (in years).
- Interest Compounding Frequency: How often is the interest added to the principal to earn further interest (e.g., monthly, quarterly, annually)?
2. Use a Reliable Calculator or Formula:
- LIC FD Calculator: The easiest and most accurate way is to use the official LIC FD calculator on their website or mobile app. It incorporates the latest interest rates and compounding frequencies.
- Manual Calculation (Approximate): If you prefer a manual calculation, use this formula for simple interest:
Interest = (Principal Amount × Interest Rate × Tenure) / 100
However, remember that LIC FDs use compound interest so that this formula will provide an estimate, not the exact Amount.
3. Consider Additional Factors:
- Senior Citizen Benefits: LIC offers an additional 0.25% interest rate for senior citizens (aged 60 years and above).
- Tax Implications: Interest earned on LIC FDs is taxable as income. TDS (Tax Deducted at Source) may be applicable if the interest exceeds certain thresholds.
Example (using simple interest formula for approximation):
- Principal Amount: ₹10,000
- Interest Rate: 7.75% p.a.
- Tenure: 5 years
Interest = (10,000 × 7.75 × 5) / 100 = ₹3,875
Approximate Maturity Amount = Principal + Interest = ₹10,000 + ₹3,875 = ₹13,875
Final Word
A LIC Fixed Deposit for 5 years is a good alternative for investors wanting security and guaranteed returns. For low-risk investors, LIC’s set interest rates and reputation provide security. Accessibility is increased by broad eligibility, and the simple application process streamlines investing. Interest generated is taxable. Thus, investors should consider tax-saving techniques and TDS consequences. LIC 5-year Fixed Deposits provide security and profits, making them a good choice for investors who want a simple investment.
Disclaimer
This article is solely for educational purposes. Stable Money doesn't take any responsibility for the information or claims made in the blog.
