Having a stable monthly income without actively working sounds like a dream, but it can be a reality with LIC’s Fixed Deposit (FD) scheme. The Life Insurance Corporation of India (LIC) has introduced a safe and profitable investment option that provides fixed returns every month. This article will guide you through LIC’s FD scheme, its benefits, interest rates, eligibility, and how you can use it to generate passive income.
LIC’s New FD Scheme
| Feature | Details |
|---|---|
| Scheme Name | LIC Housing Finance Fixed Deposit (FD) |
| Interest Rate | Up to 6.45% per annum (Senior citizens: +0.25%) |
| Minimum Deposit | ₹2 lakh (for monthly income option) |
| Payout Options | Monthly, Quarterly, Half-yearly, Yearly |
| Tenure Options | 1 year to 5 years |
| Premature Withdrawal | Allowed (subject to penalties) |
| Loan Against FD | Up to 75% of deposit amount |
| Risk Level | Low (Backed by LIC) |
| Official Website | LIC Housing Finance |
If you are looking for a safe, reliable, and consistent income stream, LIC’s FD scheme is an excellent choice. Whether you’re a retiree looking for stable monthly payouts, a professional seeking passive income, or a homemaker wanting financial security, this FD can be a great addition to your investment portfolio.
However, make sure to compare interest rates, understand tax implications, and align the investment with your financial goals. Always consult a financial advisor before making any investment decisions.
What is LIC’s FD Scheme?
LIC Housing Finance Ltd. offers a fixed deposit scheme where investors can park their savings and earn regular interest payouts. Unlike traditional FDs from banks, this scheme is particularly designed to provide a fixed income stream, making it ideal for retirees, homemakers, and individuals seeking passive income.
see also: 8.35% Return on 15-Month FD
Why Choose LIC’s FD for Monthly Income?
Many people look for safe and reliable investment options that offer steady returns. Here’s why LIC’s FD scheme stands out:
- Backed by LIC, India’s largest insurance provider.
- Better returns compared to savings accounts.
- Multiple tenure options ranging from 1 to 5 years.
- Ideal for retirees who want a fixed monthly income.
- Premature withdrawal option in case of emergencies.
- Loan facility up to 75% of the deposit amount.
How Much Monthly Income Can You Earn?
Your monthly income depends on the amount you deposit and the interest rate applicable to your chosen tenure. Here’s an example:
| Deposit Amount | Interest Rate (5 Years) | Monthly Payout |
|---|---|---|
| ₹5,00,000 | 6.45% | ₹2,687 |
| ₹10,00,000 | 6.45% | ₹5,375 |
| ₹20,00,000 | 6.45% | ₹10,750 |
For example, if you invest ₹10 lakh at 6.45%, you will receive ₹5,375 every month as interest income. This payout is completely passive and does not require any work!
Eligibility & Documents Required
Who Can Invest?
- Indian residents
- Senior citizens (extra 0.25% interest benefit)
- NRIs (under specific conditions)
- HUFs (Hindu Undivided Families)
Documents Needed
- Identity proof (Aadhaar, PAN, Passport)
- Address proof (Utility bill, Aadhaar, Passport)
- PAN Card (for taxation purposes)
- Bank details for interest payout
How to Invest in LIC’s FD Scheme?
Step-by-Step Guide
- Visit the official website of LIC Housing Finance: www.lichousing.com
- Choose the FD scheme and select your preferred tenure.
- Download the FD application form or visit the nearest LIC branch.
- Fill in the details and attach the necessary documents.
- Submit the form along with the cheque or demand draft for your deposit amount.
- Receive your FD certificate and start earning interest.
Taxation on FD Interest
- Interest earned from LIC’s FD is taxable as per your income tax slab.
- TDS (Tax Deducted at Source) is applicable if the interest exceeds ₹40,000 per year (₹50,000 for senior citizens).
- You can submit Form 15G/15H to avoid TDS deduction if your income is below the taxable limit.
Pros & Cons of LIC FD Scheme
Pros:
Safe and secure investment, Monthly income option, Higher interest rates than savings accounts, Loan facility available, Senior citizen benefits
How to Make UPI Transactions Without Internet
Cons:
Interest is taxable, Premature withdrawal comes with penalties, No inflation protection
see also: Income Tax Exemptions and Fixed Deposit (FD) Limits in 2025
LIC’s New FD Scheme FAQs
1. Is LIC’s FD scheme safe?
Yes, LIC is a government-backed institution, making it a safe investment option with minimal risk.
2. Can I withdraw my FD before maturity?
Yes, but you may face a penalty on interest rates for premature withdrawals.
3. Who should invest in this scheme?
This scheme is best for retirees, homemakers, and conservative investors looking for fixed monthly income.
4. Can I get a loan against my FD?
Yes, LIC allows loans up to 75% of the deposit amount after three months of investment.
5. How is interest paid out?
Interest is credited monthly, quarterly, half-yearly, or yearly as per your choice, directly to your bank account.
