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Comparison Between LIC and Recurring Deposit

LIC and RD are two different investments plans designed to cater to different needs. Though both are investment plans, LIC caters more to insurance while RD is purely a savings scheme.

Definitions

  • LIC stands for LIC Insurance Corporation. An LIC policy is a life insurance policy that you can take against risks. For people who are the head of the household or need to ensure that there is a financial provision for their loved ones after their death, an LIC Policy is a good option.
  • RD is a Recurring Deposit which can be opened with any bank provided you hold a savings or current account with the bank. This is purely a savings scheme where you can earn interest. It does not provide any other benefits.

Life Insurance Corporation Policy

Life Insurance is a contract that you draw out with a company to pay premiums towards a policy. The premiums are determined based on the policy you choose, the tenure and your age. This policy is beneficial at the time of maturity as you will receive a lump sum of money at maturity value. The policy will also pay out in the event of the insured’s death or on any of the events that you are insured against. The main payout dates are:

  • Upon unfortunate death of the insured
  • When the policy matures
  • Any specified dates mentioned in the policy

LIC policies are not suitable to everyone. It is a good policy in case you have dependents. As a breadwinner, you would worry about your family members, spouse and loved ones if anything were to happen to you. If you have a life insurance policy, your nominee will receive either a lump sum or a monthly income to help them cope financially. In the event the policy matures before death, then it turns into an investment that you benefit from after saving for so many years. Some important points to remember about LIC policies are listed below.

  • LIC policies are suitable for people who have dependants.
  • Anyone who is of legal age can avail of a policy.
  • Taking out an LIC Policy is a long-term commitment.
  • Cancellation of policies will result in penalties and might be a loss.
  • With Life Insurance plans, policyholders can opt to save money in systematic plans to meet the costs of important life events such as having children, their marriage and education, and so on.
  • Policies can be taken for your spouse and children as well.
  • LIC policies should be treated as insurance rather than savings.
  • Policies under the “with profit” scheme can be extremely profitable if the market performs well. The premiums payable are usually higher, but these participating policies can share in the profits of the fund, if any.
  • An LIC Policy can be offered as collateral to avail of a loan.
  • Premiums paid towards LIC are eligible for tax deductions.

Recurring Deposit

An RD is a savings scheme offered by banks to help individuals save regularly and systematically build up a fund. The amount saved earns interest, but the interest is not eligible for tax deductions.

  • Recurring deposits can be started with as little as Rs. 10. This depends on the limits set by the bank.
  • The minimum period for an RD is usually 6 months.
  • The maximum period offered by banks is 10 years.
  • The interest rates offered on these deposits vary between banks. You should check the bank’s interest chart before opting for a tenure. Banks usually offer higher interest rates on certain tenures such as 500 days. So going for the longest tenure doesn’t necessarily fetch you a higher rate of interest. Although, with a long tenure you will earn more interest overall.
  • Withdrawals are usually not allowed.
  • You can close the deposit prematurely.
  • Banks run different RD schemes with flexible investment options to cater to different needs of the people.
  • TDS will be applicable on the interest earned on an RD. If you’re interest is lower than Rs. 10,000 in a year, then TDS is not applicable.
  • The interest earned is taxable income and should be declared in the income tax declaration.

Points

LIC

RD

Scheme

Insurance

Investment

Purpose

Risk Protection

Savings

Risk

Safe

Safe

Target audience

Caters to those who have dependents

Caters to everyone

Tenure

Flexible

10 years

Premature closure

Premature closure allowed with penalties.

Premature closure allowed

Loan

Loan facility available

Loan facility available

Tax deductions

Eligible for tax deductions

Tax deducted at source if collective interest earned is more than Rs. 10,000. Interest earned must be declared.

Read More Article on Recurring Deposit

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Recurring Deposit by Banks
Recurring Deposit by other Institutions

Customer Reviews

Page 1 of 50 1 2 3 4 5
  • IDBI Recurring Deposit
    "satisfactory"
    IDBI BANK
    0.5 5.0/5 "Blown Away!"
    I have a savings account with IDBI BANK since the interest rate is good so have decided to open Recurring Deposit with them and its 5 years now. They offer 8.6% which was satisfactory. Its a monthly investment and have enabled ECS option. This account is manageable online.
    Was this review helpful? 0
    , bangalore
    Reviewed on Mar 19, 2019
  • HDFC Bank Recurring Deposit
    "Good Investment"
    HDFC BANK
    0.5 5.0/5 "Blown Away!"
    I have recurring deposit with HDFC account, I went to the bank and opened the account , within 5 days it got activated. I used to get reminder messasge for monthly RD. Minimum I can deposit from Rs.500 to 1 lakh, the current interest with HDFC around 7.5% its really good.
    Was this review helpful? 0
    , pune
    Reviewed on Mar 17, 2019
  • SBI Recurring Deposit
    "Good Saving"
    STATE BANK OF INDIA
    0.5 5.0/5 "Blown Away!"
    Based on SBI saving account, I have opened recurring deposit with SBI, I am depositing Rs. 20,000 in a month, the bank will provide the interest around 6.7% based on the current financial year. I could access RD account through mobile application.
    Was this review helpful? 2
    , hyderabad
    Reviewed on Mar 11, 2019
  • HDFC Bank Recurring Deposit
    "Good Investment"
    HDFC BANK
    0.5 5.0/5 "Blown Away!"
    I have activated HDFC recurring deposit through online banking within 3 days of time, monthly I deposit Rs. 1000 it has the term of 12 years, the rate of interest is around 8.2%, the support is very good for the recurring queries, there is no charges for the prematures withdrawal.
    Was this review helpful? 1
    , hyderabad
    Reviewed on Mar 11, 2019
  • ICICI Bank Recurring Deposit
    "Excellent feature"
    ICICI BANK
    0.5 5.0/5 "Blown Away!"
    I have another recurring deposit account with ICICI Bank, but this one is opened through iwish. It is a flexible recurring deposit. I can choose a goal and deposit fund as and when I want too. I do not have to do it only on a monthly or quarterly basis.
    Was this review helpful? 0
    , chennai
    Reviewed on Mar 10, 2019
  • ICICI Bank Recurring Deposit
    "Good in all"
    ICICI BANK
    0.5 5.0/5 "Blown Away!"
    I have a recurring deposit at ICICI Bank as well. It was a easy process to open this account. I could do it online and I can make a investment every month. They provide a reasonable rate of interest too. I can even close this account online. I need not have to visit the bank.
    Was this review helpful? 0
    , chennai
    Reviewed on Mar 10, 2019
  • SBI Recurring Deposit
    "Good"
    STATE BANK OF INDIA
    0.5 4.0/5 "Great!"
    The interest rate is nominal when compared with other banks. As my savings account is with SBI and it was easy to do transactions for me and convenient, I have no customer care experience with Recurring Deposit account. I do monthly investment through online net banking.
    Was this review helpful? 0
    , new delhi
    Reviewed on Mar 09, 2019
  • HDFC Bank Recurring Deposit
    "Good for saving"
    HDFC BANK
    0.5 3.0/5 "Satisfactory"
    Every month I used deposit Rs. 5000 for one year of HDFC recurring deposit, the current interest is around 5 to 6% for recurring investment, I have option to take liquidity through online. The customer support is good on my queries regarding RD.
    Was this review helpful? 0
    , bangalore
    Reviewed on Mar 07, 2019
  • Citibank Recurring Deposit
    "Best saving terms"
    CITIBANK
    0.5 5.0/5 "Blown Away!"
    I had recurring deposit with CITI bank now I closed it, I used to pay Rs. 3000 on monthly basis for the period of five years, I kept has buffer as an account. I have closed it after four months, the interest was decent, I love to bank with Citibank as the online banking is convenient.
    Was this review helpful? 0
    , medak
    Reviewed on Mar 07, 2019
  • ICICI Bank Recurring Deposit
    "Good "
    ICICI BANK
    0.5 5.0/5 "Blown Away!"
    I have a Recurring Deposit account in ICICI BANK because hold a salary account where I can do a internal transfer without any issues. The interest is similar like other banks. I never had a chance to contact the customer support. I could manage this account online and it was good. I am depositing monthly 3K through online.
    Was this review helpful? 1
    , bangalore
    Reviewed on Mar 04, 2019
  • HDFC Bank Recurring Deposit
    "Very Good Service"
    HDFC BANK
    0.5 4.0/5 "Great!"
    I have started this Recurring deposit two months back and i had been investing on them at time to time. The payments had been made through the brokerage and their customer support has been guiding me every time. The interest rate with them is also quite nice when compared with the other banks.
    Was this review helpful? 1
    , new delhi
    Reviewed on Mar 03, 2019
  • Corporation Bank Recurring Deposit
    "Safe and secured investment"
    CORPORATION BANK
    0.5 5.0/5 "Blown Away!"
    I making recurring deposit with Corporation bank, I have fixed one slap to make the payment on the duration of five year. I can track the RD transactions through mobile application. The bank staff are resolving the queries on the time, its safe and secured.
    Was this review helpful? 0
    , mangalore
    Reviewed on Feb 28, 2019
  • SBI Recurring Deposit
    "Need developement on the online website"
    STATE BANK OF INDIA
    0.5 2.0/5 "Expected more"
    Currently SBI is providing recurring deposit interest around 7% per annum, as per the interest rate its good. But for the recurring deposit, the bank need improvement on the netbanking. Because every month I need deposit the money manually they wont deduct the money from my account.
    Was this review helpful? 2
    , pune
    Reviewed on Feb 25, 2019
  • SBI Recurring Deposit
    "Average RD account"
    STATE BANK OF INDIA
    0.5 5.0/5 "Blown Away!"
    I have chosen the state bank of India for my recurring deposit. One of my friend has recommended me about the SBI. The interest rates are nominal and There is no charges for maintaining the Recurring Deposit. I have been investing the amount of Rs. 5000 for last 3 years. I need to hold the money upto 7 years.
    Was this review helpful? 2
    , kolkata
    Reviewed on Feb 25, 2019
  • review Recurring Deposit
    "Very Good Service"
    RATNAKAR BANK
    0.5 4.0/5 "Great!"
    I had started this investment plan almost four to five months back and it is highly recommended to others. I had making the investments on a monthly basis and the interest rate which they are offering is very good when compared with the other banks. Their customer support team and their staffs had been helpful at all times as well.
    Was this review helpful? 0
    , mumbai
    Reviewed on Feb 25, 2019
  • ICICI Bank Recurring Deposit
    " Need more benefits"
    ICICI BANK
    0.5 3.0/5 "Satisfactory"
    Previously I had recurring deposit of Rs.20,000, every month I used to deposit it. The benefits are less hence I didn't find any worthy so I have closed the RD account, they need to give more interest on the RD part. I don't know whether they change it or not.
    Was this review helpful? 1
    , bangalore
    Reviewed on Feb 23, 2019
  • Indian Bank Recurring Deposit
    "Good Investment"
    INDIAN BANK
    0.5 5.0/5 "Blown Away!"
    In Indian Bank RD interest rate is more than 6.5% for per annum, it has minimum tenure of one year then I can prolong the recurring deposit duration upto three years. I can make the payment through online or atm, they have lots of facilities, its really good.
    Was this review helpful? 0
    , bangalore
    Reviewed on Feb 21, 2019
  • Indian Bank Recurring Deposit
    "Good Investment"
    INDIAN BANK
    0.5 5.0/5 "Blown Away!"
    In Indian Bank RD interest rate is more than 6.5% for per annum, it has minimum tenure of one year then I can prolong the recurring deposit duration upto three years. I can make the payment through online or atm, they have lots of facilities, its really good.
    Was this review helpful? 0
    , bangalore
    Reviewed on Feb 21, 2019
  • HDFC Bank Recurring Deposit
    "Fine Account"
    HDFC BANK
    0.5 5.0/5 "Blown Away!"
    I have invested my money from HDFC. I have invested the money for 6 months. Since i had a savings account with them, its a compulsory with them, i have invested with them. I have already my recurring deposit because i need to maintain a minimum balance. Since there is no issues, i have not contacted the customer care service.
    Was this review helpful? 1
    , hyderabad
    Reviewed on Feb 20, 2019
  • Kotak Recurring Deposit
    "Nice experience"
    KOTAK MAHINDRA BANK
    0.5 5.0/5 "Blown Away!"
    I also bank with Kotak Mahindra Bank for the recurring deposit. The customer support is good and there are no hassles to open this account online. I earn good interest on it and I can close the account when ever I wish too. I can also deposit what ever amount is suitable for me.
    Was this review helpful? 1
    , hyderabad
    Reviewed on Feb 07, 2019
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