Difference Between LIC and Post Office Recurring Deposit

A Recurring Deposit is a financial instrument through which individuals can deposit a fixed amount of money every month for a fixed period of time. The money deposited would accrue interest over the time period of the deposit, and the interest would be payable over a monthly, annual or end of maturity basis.

A Recurring Deposit or RD, as it is commonly known as, is a good alternative for those who do not have a large amount of capital to invest in a Fixed Deposit. As compared to a Fixed Deposit, which requires a one-time deposit of a sum not less than Rs. 10, 000, RD allows for a minimum deposit of Rs. 500, with each subsequent deposit made to be in multiples of 100.

In this way, an RD allows for individuals to be able to budget as well as save for the future. A Recurring Deposit also pays out the same rate of interest as a Fixed Deposit, depending on the tenure of the deposit.

An RD can be for tenures ranging from 6 months to a maximum of 10 years.

The LIC or Life Insurance Corporation of India is a company that was instituted in the year 1956 with the aim of providing life insurance policies to the Indian people. The company is now the largest provider of life insurance in India, with assets worth over $ 230 billion.

The Post Office, also known as India Post, was set up in the year 1774 by the British Empire. With a network spanning the length and breadth of the country, the Post Office runs services that include letters, parcels as well as financial services like the Public Provident Fund, life insurance and savings accounts and recurring deposits.

LIC Recurring Deposit

The LIC Recurring Deposit scheme is a financial tool that enables individuals to save money and earn from their savings. The LIC RD is known as the Jeevan Saral plan and is a recurring deposit plan that allows individuals to deposit a sum of money either monthly, quarterly, half-yearly or annually for a fixed duration, on which they will receive a pre-determined interest.

Individuals who wish to invest in the LIC Jeevan Saral can do so by opening an account with the LIC, after which they can select the tenure of their deposit. This can range between a minimum tenure of 10 years and a maximum of 35 years.

This is a long term deposit plan that offers individuals attractive rates of interest, as well as the chance to decide the premium amount. If the individual survives till the deposit matures, he stands to receive 250 times the deposit, which is the maturity sum along with loyalty additions. In case the investor passes away before maturity of the term, a guaranteed return of investment of 250 times the initial amount deposited will be transferred to his heirs.

Individuals investing in the scheme also stand to benefit from income tax exemptions, as the premium amount as well as the amount deposited is exempted from income tax under Section 80c.

The LIC Jeevan Saral scheme has another advantage in that it is auto renewed. If an individual forgets to claim the premium upon maturity, the scheme is renewed for an additional 10 years, and he will receive additional premium over the extended period of time.

The financial future of family members can be safeguarded from an early age through this scheme, as the minimum age for depositors is 12 years of age.

Elderly investors stand to receive an additional amount as premium, with the minimum amount received as premium guaranteed being Rs. 400 a month.

In case the individual wishes to opt out of the scheme, he may do so partially after a period of 3 years from the commencement of the scheme.

To incentivize investors to invest in long term policies, LIC offers a loyalty addition bonus for every year above a 10 year deposit tenure. This amount will be handed over to the investor upon maturity of the deposit.

Post Office Recurring Deposit

The Post Office Recurring Deposit scheme is a 5 year RD scheme. Under this, investors stand to receive a guaranteed sum assured upon maturity of the premium deposited over the term.

The Post Office Recurring Deposit scheme allows investors to make an initial deposit of Rs. 10/- and subsequent deposits in multiples of 5, with Rs. 10/- being the minimum amount. The deposits have to be made on a monthly basis, with the deposits accruing interest at the rate of a Foxed Deposit scheme.

Investors who choose to would like to invest in the Post Office’s RD scheme can open as many accounts as they desire at any of the post offices in the country. Individuals can also open accounts in the names of minors, with the minimum age for opening an RD based account being 10 years.

Upon maturity, the investor will receive a Sum Assured along with the interest for the period, i.e 5 years.

Investors can also choose to open a joint account for their Post Office RD schemes, and can choose to transfer these accounts to any post office within the country.

Comparison Between LIC Recurring Deposit and Post Office Recurring Deposit

Given below are the differences between the Life Insurance Corporation’s recurring Deposit and the Post Office Recurring Deposit scheme:

  LIC RD Post Office RD
Tenure Up to 35 years Up to 5 years
Minimum amount Rs. 250 Rs. 10
Subsequent premium amount Multiples of Rs. 50 Multiples of Rs. 5
Loan against policy Available Not available
Rate of interest Not guaranteed- loyalty addition provided 8.4% per annum, with interest compounded per quarter
Tax benefit Yes, under Section 80c up to Rs. 1, 00, 000 (premium amount) No benefit
Premature Surrender Yes, 80% of Monthly Sum Assured after 3rd year, 90% after 5th year Yes, but interest penalty charged
Recurring Deposit - Sitemap

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Customer Reviews

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    "Need to decrease interest rate "
    BAJAJ FINANCE LIMITED
    0.5 4.0/5 "Great!"
    BAJAJ FINANCE has offered a pre approved personal loan offer and I accepted for the same. I have taken this loan 2 months back. The process was smooth and submitted required docuemtns within 1.5 hrs amount was credited to my account with 1.64L with tenure period of 4 years. The rate of interest is 18% which is high. Fee was deducted of 9K. There is pre closure option after 30 days with charge of 4%. EMI need to pay the amount of 4K. The best which I would like to say is online process was done with short term.
    Was this review helpful? 5
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  • ICICI Bank
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    "Good service"
    ICICI BANK
    0.5 5.0/5 "Blown Away!"
    The tenure for ICICI personal loan is for 3 years, I have taken the loan for some personal purposes. I got my loan statements on time but the interest rate of the loan is 12% which is bit high for me. I wish the bank can reduce it up to 10%. Otherwise everything is good about the loan.
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  • SBI Cards Credit Card
    "Good service"
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    , hyderabad
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  • SBI Cards Credit Card
    "Ok service"
    SBI CARDS
    0.5 5.0/5 "Blown Away!"
    I am using SBI credit card for more than three months, there are some reward points and offers in the card. I used this card for online shopping, fuel surcharge and groceries.The credit limit of the card is sufficient and I like the most about the card is that it is a life time free card and very good to use.
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  • IndusInd Bank Credit Card
    "Ok service"
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    0.5 5.0/5 "Blown Away!"
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  • IndusInd Bank Credit Card
    "Good service"
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    0.5 5.0/5 "Blown Away!"
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    , chennai
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  • IndusInd Bank Credit Card
    "Excellent card"
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    0.5 5.0/5 "Blown Away!"
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    , hyderabad
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  • ICICI Bank Credit Card
    "Good service"
    ICICI BANK
    0.5 5.0/5 "Blown Away!"
    Am having ICICI credit card for two years, I feel good and have not face any issues. The best part about the card is its a life time free card. I used to get my card statement on time. I used this card for shopping, groceries and for many other personal purposes.I am using the bank mobile app which function smooth and simple.
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  • SBI Cards Credit Card
    "Good service"
    SBI CARDS
    0.5 5.0/5 "Blown Away!"
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  • IndusInd Bank Credit Card
    "Good service "
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    0.5 4.0/5 "Great!"
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  • Citibank Credit Card
    "Good "
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  • IndusInd Bank Credit Card
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  • Axis Bank Car Loan
    "Average"
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  • ICICI Bank Credit Card
    "Need to increase the credit limit "
    ICICI BANK
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    , kolkata
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  • Axis Bank Credit Card
    "Good card"
    AXIS BANK
    0.5 4.0/5 "Great!"
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    , kolkata
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  • IndusInd Bank Credit Card
    "Good service"
    INDUSIND BANK LTD
    0.5 4.0/5 "Great!"
    I got INDUSIND credit card from few months ago.The card have an EMI conversion. I used the card for multi purposes like shopping, online payment, ticket booking. This is annually chargeable card, I am not satisfied with the credit limit of Rs.75000 as I am expecting more than than 1 lakh.
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    , kolkata
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  • IndusInd Bank Credit Card
    "Excellent"
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    0.5 5.0/5 "Blown Away!"
    I got a life time free card offer from INDUSIND bank hence applied through online on three months back. I received the call on time and the process was done on smooth. I got the card on exact time frame. The credit limit is sufficient and they provided good offers and benefit as well.I use this card for shopping and travel purpose.
    Was this review helpful? 0
    , kolkata
    Reviewed on Mar 21, 2020
  • RBL Bank Credit Card
    "Average service"
    RATNAKAR BANK
    0.5 1.0/5 "Really Bad"
    RBL credit card is a chargeable card, I always have to go to Bajaj Finance to pay my credit card bill. I am not satisfied with the customer service which has to be improved. I used this card when ever needed for shopping, fuel surcharge and bill payment.The limit of the card is fine.
    Was this review helpful? 6
    , ranchi
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