LIC FD Gives 16% Guaranteed Return: Know the Right Way to Invest and Interest Rates LIC FD Scheme

If you’ve heard claims like “LIC FD gives 16% guaranteed return,” it might have piqued your interest. After all, who wouldn’t want a safe investment option promising such impressive returns? However, let’s pause and take a closer, fact-based look at what LIC Fixed Deposit (FD) schemes really offer, how they work, and how you can invest smartly in them.

In this guide, we’ll break down the LIC FD scheme, debunk the 16% return myth, and help you understand the actual interest rates, features, and the right way to invest. Whether you’re a first-time investor or a financial professional, this article is tailored to give you both clarity and valuable insights.

Right Way to Invest and Interest Rates LIC FD Scheme

Feature	Details
Actual Interest Rates (General Citizens)	7.25% to 7.75% per annum
Senior Citizen Rates	Additional 0.25% (up to 8.00% per annum)
Tenure Options	1 year, 18 months, 2 years, 3 years, 5 years
Minimum Deposit Amount	₹20,000 (cumulative & annual non-cumulative)
Premature Withdrawal	Available with conditions
Loan Facility Against FD	Up to 75% of deposit amount
16% Return Claim Validity	False; official rates are up to 8% max

To sum up, the LIC FD Scheme is a solid, stable investment option offering guaranteed returns up to 8%, not 16% as some false claims suggest. It is ideal for risk-averse investors, senior citizens, and those seeking predictable, regular income without worrying about market ups and downs. Always cross-check with official sources and LIC agents before making any investment decisions.

Understanding LIC FD Scheme: What It Really Is

The LIC Fixed Deposit Scheme is offered by LIC Housing Finance Limited (LIC HFL), not directly by LIC India itself. It’s a safe, non-market linked investment option, ideal for risk-averse investors who prefer predictable returns over the volatility of stocks or mutual funds.

Here’s how it works:

• You deposit a lump sum amount with LIC HFL for a fixed period.
• LIC pays you interest at a pre-agreed rate, either monthly, annually, or at maturity (depending on your choice).
• After maturity, you get back your original deposit along with the accumulated interest.

Important: Nowhere does LIC HFL offer a 16% guaranteed return. Currently, the highest rate is 8% per annum for senior citizens. Misleading claims about 16% returns often come from non-official or promotional sources, so always check the official LIC HFL website or consult authorized LIC agents for accurate details.

see also: How Much Return You Will Get by Depositing Rs 1 Lakh to Rs 10 Lakh

LIC FD Interest Rates: Accurate, Updated Figures

Here are the current LIC HFL FD interest rates:

Tenure	Interest Rate (General Citizens)	Interest Rate (Senior Citizens)
1 Year	7.25%	7.50%
18 Months	7.35%	7.60%
2 Years	7.60%	7.85%
3 Years	7.75%	8.00%
5 Years	7.75%	8.00%

Types of LIC FD Schemes Available

1. Cumulative Deposit Scheme

• Interest is compounded annually.
• Paid at maturity along with principal.
• Ideal for those who don’t need regular payouts and want to grow their investment steadily.

2. Non-Cumulative Deposit Scheme

• Interest is paid monthly or annually.
• Best for retirees or individuals needing regular income flow.
• Requires a minimum deposit of ₹2 lakh for monthly interest payout.

How to Invest in LIC FD: Step-by-Step Guide

Investing in LIC FD is simple. Here’s how:

Step 1: Choose Your Scheme

Decide between Cumulative or Non-Cumulative depending on whether you want regular interest payouts or a lump sum at the end.

Step 2: Decide Tenure & Amount

Minimum deposit: ₹20,000.
Select from available tenures: 1 year, 18 months, 2, 3, or 5 years.

Step 3: Complete Application Form

You can get the form:

• From your nearest LIC HFL branch
• Online via the official website

Step 4: Submit Required Documents

Standard KYC documents needed:

• PAN Card
• Aadhaar Card (or any valid address proof)
• Passport-sized photograph
• Bank account details for crediting interest & maturity proceeds

Step 5: Make the Payment

Modes accepted:

• Cheque
• Online transfer
• Demand Draft

Step 6: Collect FD Receipt

Once your payment is processed, you’ll receive an official FD receipt as proof of investment.

Why Choose LIC FD? Key Benefits

1. Low Risk: LIC Housing Finance is a trusted name backed by LIC, ensuring safety and reliability.
2. Stable Returns: Unlike stocks or mutual funds, returns are guaranteed.
3. Loan Facility: Need funds urgently? You can take a loan of up to 75% of your FD amount.
4. Senior Citizen Advantage: Extra 0.25% interest rate benefit.
5. Premature Withdrawal Option: Though not advisable, it is available in emergencies (after 3 months, with penalties).

Should You Believe in the “16% Guaranteed Return” Hype?

The short answer: No.

No licensed financial institution, especially a government-backed entity like LIC HFL, offers such high, unrealistic returns. The market conditions, RBI policies, and government regulations make such returns impractical in today’s interest rate scenario.

Always rely on:

• Official sources like LIC HFL website
• Authorized LIC agents
• Verified financial platforms

see also: These Are the Best Tax-Saving FDs

Invest and Interest Rates LIC FD Scheme FAQs

1. What is the current highest interest rate offered in LIC FD?

Currently, the highest interest rate is 8.00% per annum for senior citizens on a 3 or 5-year deposit.

2. Is the LIC FD scheme safe?

Yes, LIC HFL FDs are considered very safe, backed by LIC Housing Finance’s solid reputation and consistent performance.

3. Can I withdraw LIC FD before maturity?

Yes, after 3 months of deposit, premature withdrawal is allowed, though some penalty interest may be deducted.

4. How is the interest paid?

You can opt for:

• Monthly payout (non-cumulative, ₹2 lakh minimum)
• Annual payout (non-cumulative)
• Lump sum at maturity (cumulative)

5. Is there any tax benefit on LIC FD?

Currently, LIC FDs do not offer tax deduction under Section 80C. However, interest income is taxable as per your income slab.