The Life Insurance Corporation of India (LIC) has introduced a new fixed deposit–style investment plan that is quickly gaining attention across the country. This scheme is being highlighted for its potential to offer high monthly returns on a one-time investment. Many investors are now curious whether this plan is as good as it sounds and if it could be a reliable option for monthly income seekers.
Promise Of Monthly Income
The highlight of the scheme is the claim that an investor can receive a monthly return of ₹6,500 by investing ₹1 lakh. This has created significant excitement, especially among retired individuals and conservative investors who look for low-risk, fixed-income products. A steady monthly income is often more important than a large lump-sum return for those who depend on regular payouts to manage household expenses or healthcare needs.
Real Return Expectations Explained
While the ₹6,500 monthly figure is prominently advertised, it’s essential to understand the basis behind it. That kind of return would typically require either a much larger deposit or an extended period of compounding. The monthly payout on a ₹1 lakh deposit, depending on the exact interest rate, is likely to be much lower in reality. Investors should be aware that this number may be based on an ideal scenario such as a higher deposit amount of ₹10 lakh or more at interest rates above 7% annually.
Interest Rate And Tenure
LIC’s scheme is expected to offer interest rates between 6.5% and 7.8% annually, depending on the investment amount, tenure, and investor’s age. The tenure can range from a short period of one year to longer options extending up to ten years. For senior citizens, the rate might be slightly higher than what is available to regular depositors, making it a preferred choice for older individuals who prioritize income over capital growth.
Option For Monthly Payout
A key feature of this FD scheme is the ability to receive interest payouts every month instead of waiting until maturity. This is highly beneficial for those who need regular cash flow. Once the deposit is made, the monthly income begins flowing based on the interest accrued. The principal remains untouched and is returned at the end of the term.
Target Audience Of Scheme
This plan is best suited for senior citizens, pensioners, and those who prefer secure and fixed returns without exposure to market risks. It is also ideal for conservative investors who are not comfortable with mutual funds, stock markets, or other instruments that fluctuate in value. People in retirement especially appreciate predictable returns, and this plan is designed with that mindset.
Stability And Trust Factor
One of the biggest advantages of investing in an LIC product is the trust and security that come with it. LIC is a government-owned institution with a long history of reliability. The fixed deposit scheme benefits from LIC’s strong financial standing and reputation. For many Indian families, the name LIC itself stands for stability, which makes this plan all the more attractive.
Key Terms To Understand
Investors should pay close attention to the scheme’s terms and conditions before investing. One of the most important factors to check is whether premature withdrawal is allowed. Some fixed deposit schemes impose penalties for early exit, while others may not permit withdrawal at all until the end of the term. Understanding the lock-in period and maturity terms is crucial before making a decision.
Tax On Interest Income
While the plan promises fixed monthly returns, investors should not overlook the tax implications. The interest earned through this FD scheme is taxable under the investor’s income slab. If the annual interest crosses a certain limit, tax may be deducted at source. Investors who fall into higher tax brackets should plan accordingly and consider whether the post-tax return meets their expectations.
Comparing Other Investment Options
Before putting money into the scheme, it’s wise to compare its returns with other options in the market. For instance, government-backed savings schemes or senior citizen savings schemes also offer monthly interest. Some post office investment options come with tax-saving benefits under specific sections of the Income Tax Act. While LIC’s scheme offers comfort and safety, its interest rate may not be the highest available in the market.
How To Invest In Scheme
To invest in this LIC fixed deposit–style scheme, interested individuals can visit the nearest LIC branch or approach a licensed LIC agent. The application process is straightforward and usually involves submitting identification documents, address proof, and completing the investment form. Depending on the amount, additional verification or documentation may be required. The investment amount can generally be paid via cheque, demand draft, or online transfer.
Risks And Considerations
While this plan offers guaranteed returns, it’s not completely without risks. The biggest risk lies in inflation outpacing the interest earned. If inflation rises significantly, the fixed returns from the deposit may not be enough to maintain purchasing power. Also, because the scheme locks in funds for a set period, it limits liquidity. Emergency needs may require early withdrawal, which can reduce or cancel the promised return.
Final Thoughts On LIC Plan
LIC’s new fixed deposit–like scheme offers a familiar and comforting investment model for individuals who value safety and monthly income. While the advertised ₹6,500 per month on ₹1 lakh investment is appealing, investors should look closely at the actual numbers and applicable terms. The real returns may vary based on deposit size and tenure. For those who want steady income without market risk, this plan is a credible option. However, investors must weigh it against other available instruments and consider their own financial goals before making a commitment.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult a certified financial advisor before making any investment decisions based on this information.