Fixed deposits (FDs) continue to be one of the most trusted investment options in India, especially for conservative investors who seek safety and steady returns. Among the various institutions offering fixed deposit schemes, the Life Insurance Corporation of India (LIC) stands out due to its credibility, government backing, and attractive features. As of 2024, the LIC FD interest rates remain competitive and cater to a broad spectrum of investors, including senior citizens, salaried professionals, and retirees. Understanding the current LIC FD interest rates in 2024 can help individuals make informed investment decisions and maximize returns within their risk comfort zone.
Understanding LIC Fixed Deposits
What Are LIC Fixed Deposits?
LIC Fixed Deposits are term deposit schemes provided by LIC Housing Finance Limited (LIC HFL), a subsidiary of Life Insurance Corporation of India. These fixed deposits allow individuals to deposit a lump sum amount for a predetermined period and earn fixed interest income. The interest rate stays unchanged throughout the tenure, offering financial stability regardless of market fluctuations.
Types of LIC Fixed Deposits
- Regular Fixed Deposit: Interest is paid on a monthly, quarterly, or annual basis, depending on the investor’s choice.
- Cumulative Fixed Deposit: Interest is compounded and paid at the time of maturity along with the principal amount.
LIC FD Interest Rates 2024
Latest Interest Rates Offered
In 2024, LIC Housing Finance is offering the following interest rates on its fixed deposit schemes:
- 1 year to 1 year 11 months: 7.25% per annum (general public)
- 2 years to 2 years 11 months: 7.40% per annum
- 3 years to 5 years: 7.50% per annum
- Senior Citizens: Additional 0.25% on all tenures
These LIC FD rates in 2024 are subject to change based on market conditions and RBI guidelines. Investors should verify the latest rates before making a deposit.
Eligibility for LIC Fixed Deposits
Who Can Invest?
LIC FDs are open to a wide range of investors, making them an inclusive investment tool. Eligible entities include:
- Resident Individuals (including senior citizens)
- Hindu Undivided Families (HUFs)
- Partnership Firms
- Trusts and Societies
- Private and Public Limited Companies
Investors must fulfill KYC requirements and provide necessary documentation to open an FD account with LIC Housing Finance.
Minimum and Maximum Investment
The minimum deposit required to invest in an LIC fixed deposit is ₹20,000. There is no official cap on the maximum amount, making it flexible for high-value investors as well. However, investments exceeding ₹2 crores may require prior approval and could be subject to customized interest rates or terms.
Interest Payout Options
Frequency of Interest Payments
LIC offers different payout options depending on the investor’s financial goals:
- Monthly Interest Payout: Ideal for retirees or individuals seeking regular income.
- Quarterly Interest Payout: Suitable for those wanting periodic returns with moderate frequency.
- Cumulative Option: Best for investors aiming for long-term capital appreciation, as interest is compounded and paid on maturity.
Premature Withdrawal Policy
LIC FDs allow premature withdrawal under certain conditions. However, there is usually a penalty for withdrawing the deposit before the completion of the lock-in period. The penalty typically ranges from 1% to 2% on the interest rate applicable for the actual period the deposit remained with the company.
Taxation on LIC Fixed Deposits
Tax Deducted at Source (TDS)
The interest earned on LIC FDs is taxable as per the investor’s income tax slab. If the annual interest income exceeds ₹5,000, TDS is deducted at 10% (provided PAN is submitted) or 20% (without PAN). However, investors can submit Form 15G or 15H (for senior citizens) to avoid TDS if their total income is below the taxable threshold.
Tax-Saving FD Option
As of now, LIC Housing Finance does not offer a tax-saving fixed deposit under Section 80C. Investors seeking tax benefits may explore other instruments or schemes available in the market.
Why Choose LIC FDs in 2024?
Benefits of LIC Fixed Deposit Schemes
- High Credibility: Backed by LIC, one of India’s most trusted financial institutions.
- Attractive Interest Rates: Especially appealing to conservative investors and senior citizens.
- Flexible Tenure: Investment period ranges from 1 to 5 years.
- Safe Investment: Low-risk profile with stable returns.
- Easy Application Process: Available both online and through authorized agents or branches.
How to Open an LIC FD in 2024
Step-by-Step Process
Opening an LIC Fixed Deposit is a straightforward process. Here are the steps:
- Visit the official LIC Housing Finance website or a physical branch.
- Choose the deposit type (regular or cumulative) and desired tenure.
- Fill in the application form with personal, financial, and nominee details.
- Submit necessary KYC documents such as PAN card, Aadhaar card, and address proof.
- Deposit the required amount via cheque, demand draft, or online transfer.
- Receive the fixed deposit receipt as confirmation.
Investors can also track their FD details, interest payouts, and maturity dates through LIC’s online customer portal.
Comparison with Bank FDs
LIC FDs offer slightly higher interest rates than many public and private sector banks, especially for longer tenures and senior citizens. While bank FDs offer insurance coverage up to ₹5 lakhs under DICGC, LIC FDs come with the assurance of a government-backed NBFC, which provides a comparable level of security. Investors often prefer LIC FDs for better returns and institutional trust.
LIC FD interest rates in 2024 present an appealing opportunity for investors seeking fixed income with minimal risk. With tenures ranging from 1 to 5 years and flexible payout options, LIC FDs serve both short-term and long-term financial goals. Senior citizens benefit even more from the extra interest rate offered. While it may not offer tax-saving benefits, the security, predictable returns, and simplicity make LIC Fixed Deposits a sound choice for a wide range of investors. As always, it’s important to compare current rates and terms before investing and align your choice with your overall financial strategy.