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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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    Customer Reviews

  • Page 1 of 48 1 2 3 4 5
    • IDBI Recurring Deposit
      "Average service"
      IDBI BANK
      0.5 3.0/5 "Satisfactory"
      I have a savings account with IDBI bank for the past 5 years. As a long time customer with IDBI bank I trusted them and invested some money recurring deposit with IDBI itself. I renew this recurring deposit account every year. I get a interest of 7% which is very less.
      Was this review helpful? 0
      , delhi
      Reviewed on Nov 17, 2017
    • SBI Recurring Deposit
      "Good service"
      STATE BANK OF INDIA
      0.5 4.0/5 "Great!"
      As I have a savings account with State Bank of India I started a recurring deposit account with them. But I'm really not sure about the interest rates they provide me but it's good for both my RD accounts in this State bank of India as well as the other bank IOC.
      Was this review helpful? 0
      , kolkata
      Reviewed on Nov 17, 2017
    • Kotak Recurring Deposit
      "Satisfactory & happy"
      KOTAK MAHINDRA BANK
      0.5 4.5/5 "Excellent!"
      They are giving 6% interest rate for the Recurring Deposit. It was a very good service with Kotak. The request has been placed online. I have chosen Kotak because they are giving more benefits and high potentials. The customer service and response is good.
      Was this review helpful? 0
      , kolkata
      Reviewed on Nov 16, 2017
    • SBI Recurring Deposit
      "Excellent in service , hike in interest rate"
      STATE BANK OF INDIA
      0.5 5.0/5 "Blown Away!"
      I have invested in recurring deposit and the return value is good based on the pre tax which was levied and it was levied based on certain circumstances. I would like to say that the customer service is good one with them, also I really dont have any issues on it.
      Was this review helpful? 0
      , bangalore
      Reviewed on Nov 16, 2017
    • Tamilnad Mercantile Bank Recurring Deposit
      "Excellent "
      TAMILNAD MERCANTILE BANK
      0.5 4.5/5 "Excellent!"
      The rate of interest is higher for RD with Tamilnad Mercantile Bank compared to others, I will get a good return. I pay 2000rupees per month.The statements will be sent out to my mobile number or email address . For the maturity period they will inform the customer 1 week before. Manager will call the customer directly. There is no compulsion for the customer it is based up on their own interest. It is a tenure of 7 years.
      Was this review helpful? 0
      , madurai
      Reviewed on Nov 13, 2017
    • HDFC Bank Recurring Deposit
      "Secure Deposit"
      HDFC BANK
      0.5 5.0/5 "Blown Away!"
      I have taken a recurring deposit with HDFC bank. The total tenure for this deposit is for 60 months. They have given a rate of interest of 7.90% and now its lowered to 6.75 percentage. Monthly from my HDFC savings account they will deduct that amount.
      Was this review helpful? 0
      , chennai
      Reviewed on Nov 08, 2017
    • Vijaya Bank Recurring Deposit
      "Excellent"
      VIJAYA BANK
      0.5 5.0/5 "Blown Away!"
      I had a recurring deposit from Vijaya Bank and the process for that was also good. I have no hassles with the bank as they have always been proper in their response to the customer. The benefits of this account is also fine and I no longer use the account. I have closed it.
      Was this review helpful? 0
      , bangalore
      Reviewed on Nov 06, 2017
    • ICICI Bank Recurring Deposit
      "Excellent service"
      ICICI BANK
      0.5 5.0/5 "Blown Away!"
      I never find any difficulty with my ICICI requiring deposit service I am using ICICI mobile application so the every transaction will be done through online so I don't need to contact their branch or their staffs their mobile application is very easy to use and user friendly it was totally a good experience with ICICI.
      Was this review helpful? 0
      , chennai
      Reviewed on Nov 01, 2017
    • Syndicate Bank Recurring Deposit
      "Good Service"
      SYNDICATE BANK
      0.5 4.0/5 "Great!"
      As I have a savings account with SYNDICATE BANK I started a recurring deposit account also with them. I have been holding this recurring deposit account for the past 8 months. I pay Rs. 500 for this recurring deposit account. I get an interest of around 8%.
      Was this review helpful? 0
      , guntur
      Reviewed on Oct 31, 2017
    • SBI Recurring Deposit
      "Not a good investment"
      STATE BANK OF INDIA
      0.5 2.0/5 "Expected more"
      I created this Recurring Depoist account some time back and the return I got was little disappointing. I had paid Rs.10000 every month and was expecting a 7.25% Interest. But at the end, after the cut of all taxes I recieved only 4.5% profit, which for me is pure waste of investment.
      Was this review helpful? 0
      , ghaziabad
      Reviewed on Oct 29, 2017
    • HDFC Bank Recurring Deposit
      "Good Service"
      HDFC BANK
      0.5 4.0/5 "Great!"
      I have my salary account with HDFC bank so I thought of holding a Recurring deposit account with them as their services are good. Now I have been holding a Recurring deposit account with them for the past 1 year. I remember for the last 6 months I'm paying between Rs. 1000 to Rs. 2000 monthly. They give me 5.25% as interest.
      Was this review helpful? 0
      , new delhi
      Reviewed on Oct 28, 2017
    • HDFC Bank Recurring Deposit
      "Good Saving"
      HDFC BANK
      0.5 4.0/5 "Great!"
      Holding Recurring deposit account with HDFC, I used to pay Rs. 3000 on every month, it has tenure of one year, But the interest rate is very low like the banks norms. I think HDFC Is providing 6% of interest for the RD account, I am using it only for the investment purpose.
      Was this review helpful? 0
      , pune
      Reviewed on Oct 25, 2017
    • HDFC Bank Recurring Deposit
      "Very good account"
      HDFC BANK
      0.5 5.0/5 "Blown Away!"
      HDFC Bank is my corporate account and my salary account is with HDFC. The reason why I had chosen HDFC for the Recurring Deposit was because of the interest rate which is 6% and it is the best and we have to pay monthly 1200 . This Recurring Deposit request was placed online. I can also view my maturity instructions online
      Was this review helpful? 0
      , new delhi
      Reviewed on Oct 17, 2017
    • HDFC Bank Recurring Deposit
      "Good Saving"
      HDFC BANK
      0.5 3.0/5 "Satisfactory"
      Generally invest Rs.10,000 on monthly average in my HDFC recurring deposit account. It has the tenure of two years, after maturity period I would get the amount around 30,000 and above. I am satisfied with them, online transaction is easy to make the payment.
      Was this review helpful? 0
      , chandigarh
      Reviewed on Oct 13, 2017
    • ICICI Bank Recurring Deposit
      "Good saving and convenient saving"
      ICICI BANK
      0.5 5.0/5 "Blown Away!"
      ICICI recurring deposit is very convenient to access through online, I opened RD through netbanking it was simple. Currently I am investing Rs.5000 for a year , I get 6.9% of interest per annum. I am could do the liquidity through online, but there was some charge applicable around Rs.300.
      Was this review helpful? 0
      , pune
      Reviewed on Oct 12, 2017
    • Axis Bank Recurring Deposit
      "Average Service"
      AXIS BANK
      0.5 3.5/5 "Pretty good"
      As I'm holding my salary account with AXIS Bank I decided to maintain a Recurring Deposit account with them. Now I have this account for the past 1 year. They offer me 7 to 8% interest. The funds did not auto debited from my salary account to this RD account. Every month I had to visit the bank. After 4 months then this problem got rectified. The interests can be improved.
      Was this review helpful? 0
      , delhi
      Reviewed on Oct 09, 2017
    • ICICI Bank Recurring Deposit
      "Best"
      ICICI BANK
      0.5 5.0/5 "Blown Away!"
      I am having the recurring deposit with the ICICI bnak and the interest rate is around 8.5%, also their customer service is nice one for me, also their response too. Online banking services are good one with the ICICI bank.
      Was this review helpful? 0
      , panvel
      Reviewed on Oct 07, 2017
    • Canara Bank Recurring Deposit
      "Excellent Service"
      CANARA BANK
      0.5 5.0/5 "Blown Away!"
      I have been holding an Recurring deposit in the CANARA BANK for few years now. As I liked CANARA BANK very much I hold this here. All services are good in this CANARA BANK. Every month I pay Rs. 60000 to this. My interest for this recurring deposit is 8.5% - 9%.
      Was this review helpful? 0
      , bangalore
      Reviewed on Sep 30, 2017
    • HDFC Bank Recurring Deposit
      "Very Good"
      HDFC BANK
      0.5 4.5/5 "Excellent!"
      I have the recurring deposit account with the HDFC bank and their interest rate is around 6.7%. Response is very good one for me and the total lock in period is around three to four years of time , also it depends on the choice.
      Was this review helpful? 0
      , patna
      Reviewed on Sep 28, 2017
    • HDFC Bank Recurring Deposit
      "Recurring deposit"
      HDFC BANK
      0.5 4.0/5 "Great!"
      Its just hold a saving account with HDFC based on which i had opened this RD. I dont see much difference in the interest rate nor i am able to save much savings it was meager. The interest rate was very much minimal not that much and all. For trial period i had opened this RD and i had preclosed it .This was taken before 6 years and RD was taken for a tenure of 3 months only.
      Was this review helpful? 0
      , bangalore
      Reviewed on Sep 28, 2017
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