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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
    • YES Bank Recurring Deposit
      "Excellent service"
      YES BANK
      0.5 5.0/5 "Blown Away!"
      I have opened Recurring deposit through YES Bank for a while, Response is also good one with the Yes bank. I don't have any issues with them till now, the tenure period is up to one years, there is no issue till now i have face in this bank, overall service is good.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Dec 11, 2018
    • Punjab National Bank Recurring Deposit
      "Good online option for RD with PNB"
      PUNJAB NATIONAL BANK
      0.5 3.0/5 "Satisfactory"
      The online facility is there for RD, they are providing moderate interest for recurring deposit. I can deposit minimum of Rs. 1000, they are providing the interest around 7.1% for per annum. I could deactivate the RD through online but it was not successful.
      Was this review helpful? 1
      , hyderabad
      Reviewed on Dec 04, 2018
    • Kotak Recurring Deposit
      "Average service"
      KOTAK MAHINDRA BANK
      0.5 3.0/5 "Satisfactory"
      I have a Recurring deposit account with KMB from last 8 months, i invest an amount of Rs 500 every month. Customer support was average with this bank and i was not much satisfied with the terms and conditions. I am not aware of the returns on investment.
      Was this review helpful? 1
      , bangalore
      Reviewed on Nov 29, 2018
    • Oriental Bank of Commerce Recurring Deposit
      "Very good banking"
      ORIENTAL BANK OF COMMERCE
      0.5 5.0/5 "Blown Away!"
      I have a recurring deposit account with Oriental bank of commerce. Last 20 years before i have opened the account. I have been depositing the minimum amount of Rs. 500 every month. I have chosen the tenure period of 1 year earlier and i have increased the same. Since the bank branch is nearby, i have selected my deposit with oriental bank.
      Was this review helpful? 1
      , new delhi
      Reviewed on Nov 28, 2018
    • HDFC Bank Recurring Deposit
      "Good"
      HDFC BANK
      0.5 4.0/5 "Great!"
      I have a Recurring deposit account with HDFC Bank and it was taken before 1.5 years. I can maintain the account through net banking and it was easy. I have invested 50K for 2 years. I am getting 6.25% of interest rate which was okay. The customer service is average.
      Was this review helpful? 6
      , chennai
      Reviewed on Nov 23, 2018
    • ICICI Bank Recurring Deposit
      "Good Experience"
      ICICI BANK
      0.5 5.0/5 "Blown Away!"
      I have a recurring deposit in ICICI. Every month i have been depositing a particular amount and i will be getting good benefits. I don't use the customer care service. Online services always I'm using and i will look up on. Every 1 year i have been renewing the Recurring deposit when its coming to my account. Somewhere around 7.5% interest rate i will get from this recurring deposit.
      Was this review helpful? 3
      , faridabad
      Reviewed on Nov 22, 2018
    • HDFC Bank Recurring Deposit
      "Its Better"
      HDFC BANK
      0.5 4.0/5 "Great!"
      They are providing interest for the RD amount, when I done the preclosure they are taking 2% of interest. I have deposit Rs.2 ,25,000 . I took the RD for 4 years. I done the preclsoure in 3 years. They didn't provide much interest. Normally I make the ecs payment.
      Was this review helpful? 2
      , chennai
      Reviewed on Nov 19, 2018
    • HDFC Bank Recurring Deposit
      "Good"
      HDFC BANK
      0.5 5.0/5 "Blown Away!"
      I have a recurring deposit account with HDFC Bank. It was taken 2 months back. I am maintaining a salary account with them and they suggested me for RD. In returns I get 7% as an interest rate. I have to deposit monthly 1,000 rupees and the locking period is one year.
      Was this review helpful? 5
      , tiruchirapalli
      Reviewed on Nov 16, 2018
    • andhra Bank Recurring Deposit
      "Average service"
      ANDHRA BANK
      0.5 3.0/5 "Satisfactory"
      The service provided was very good with Andhra bank based on the recurring deposit,Customer service offered by them was very good,. At the end of the term I will get one reminder from them confirming that the amount is going to get matured.
      Was this review helpful? 1
      , hyderabad
      Reviewed on Nov 16, 2018
    • Karnataka Bank Recurring Deposit
      "Good service"
      KARNATAKA BANK
      0.5 3.5/5 "Pretty good"
      Karnataka bank is giving good service for the recurring deposit . There is no annual charges for the account They are going quiet good response . Am getting income tax benefits too . Overall its average investments plan . It has some nominal good returns.
      Was this review helpful? 1
      , bangalore
      Reviewed on Nov 02, 2018
    • SBI Recurring Deposit
      "Overall good"
      STATE BANK OF INDIA
      0.5 5.0/5 "Blown Away!"
      The experience for a recurring deposit is good. There are no issues in the process. The customer support and response is fine too at State Bank of India as I had no issues to open this account. I am also happy with the interest earned. Till date no hassles.
      Was this review helpful? 10
      , bangalore
      Reviewed on Oct 27, 2018
    • Kotak Recurring Deposit
      "Not satisfied"
      KOTAK MAHINDRA BANK
      0.5 2.0/5 "Expected more"
      I have a Recurring Deposit account with Kotak Mahindra Bank from last 1 year, I deposit an amount of Rs 3000 every month and the returns are not that good. I have withdrawn the amount in 6-7 months and there was no penalty charged.
      Was this review helpful? 3
      , pune
      Reviewed on Oct 24, 2018
    • Axis Bank Recurring Deposit
      "Easy process"
      AXIS BANK
      0.5 5.0/5 "Blown Away!"
      It was very convenient to open a recurring deposit with Axis Bank. I can do it online and I did not have to visit the bank for any formality. The lock in period for this account is for a year. I can also close the account online too. I am happy with the process too.
      Was this review helpful? 10
      , bangalore
      Reviewed on Sep 04, 2018
    • HDFC Bank Recurring Deposit
      "Good service"
      HDFC BANK
      0.5 4.0/5 "Great!"
      I have opened a Recurring Deposit account in HDFC bank from last 1 year. I have to pay an amount of Rs 25000 every month and all the terms & conditions were explained by the customer support of HDFC bank. In returns i get 6% as an interest which is quite good.
      Was this review helpful? 21
      , new delhi
      Reviewed on Aug 30, 2018
    • IOB Recurring Deposit
      "Good Service"
      INDIAN OVERSEAS BANK
      0.5 5.0/5 "Blown Away!"
      I've a recurring deposit with the Indian bank. I am depositing 1000 rupees a month. There hasn't been any issues with the deposit so far. It is easy to start and make payments to the recurring deposit. Auto debit option is also there for the deposit.
      Was this review helpful? 14
      , ahmedabad
      Reviewed on Jul 28, 2018
    • IOB Recurring Deposit
      "Good Service"
      INDIAN OVERSEAS BANK
      0.5 5.0/5 "Blown Away!"
      I've two recurring deposit with the IOB, I am depositing 2000 every month. There is no additional benefits apart from the nominal interest they provide. It is easy to start a recurring deposit with the Indian bank.
      Was this review helpful? 11
      , ahmedabad
      Reviewed on Jul 28, 2018
    • Kotak Recurring Deposit
      "Excellent Service"
      KOTAK MAHINDRA BANK
      0.5 5.0/5 "Blown Away!"
      I had opened this account a long time back and i had opened it online and the process in taking it has been easy, i had been depositing 2000 every month. There has been a very good service which they had been providing so far. I had been doing everything through their mobile application and it had been easy in using it.
      Was this review helpful? 13
      , chennai
      Reviewed on Jul 17, 2018
    • City Union Bank Recurring Deposit
      "Good Service"
      CITY UNION BANK
      0.5 5.0/5 "Blown Away!"
      I travel every year with my family for that purpose I deposit Monthly 5000 which gets auto debited from the account. They also offers 7.1 % interest rate. The deposit was started from the branch and it has been a very good experience with their services.
      Was this review helpful? 17
      , chennai
      Reviewed on Jul 13, 2018
    • ICICI Bank Recurring Deposit
      "Good Service"
      ICICI BANK
      0.5 5.0/5 "Blown Away!"
      I've a recurring deposit with the ICICI bank. It is so easy to start recurring deposit with the iMobile App. You need to give the reference number to the bank and the whole deposit process is automated. The monthly deposit amount gets auto debited from the account.
      Was this review helpful? 13
      , chennai
      Reviewed on Jun 27, 2018
    • Kotak Recurring Deposit
      "Best"
      KOTAK MAHINDRA BANK
      0.5 5.0/5 "Blown Away!"
      I am having the recurring deposit account with the Kotak mahindra bank and I was not aware of the rate of interest. I would like to say that the response is fine one for me with the Kotak mahindra bank.
      Was this review helpful? 7
      , bangalore
      Reviewed on Jun 23, 2018
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