LIC High-Income FD Plan: In today’s uncertain financial environment, many people are actively searching for safe investment options that can generate a steady monthly income. Fixed deposits, government-backed schemes, and insurance-linked savings plans continue to attract conservative investors who prefer stability over high risk. One such widely discussed option is the LIC High-Income FD-style plan, which claims to offer a monthly payout of ₹9,750 on a deposit of ₹1.5 lakh. While this may sound attractive at first glance, it is important to understand how such plans work, what benefits they offer, and who they are best suited for.
This article explains the structure, features, benefits, and important considerations of this LIC-linked income plan in simple terms.
What Is the LIC High-Income FD Plan
The LIC High-Income FD Plan is not a traditional fixed deposit like those offered by banks. Instead, it is generally a combination of LIC’s savings or annuity-based insurance products that are designed to provide regular income. These plans are often marketed as FD-like because they offer predictable returns and capital safety, similar to fixed deposits.
LIC, being a government-owned insurance company, enjoys a high level of trust among Indian investors. Its income-oriented plans usually involve a one-time investment, after which the policyholder receives monthly, quarterly, or yearly payouts for a fixed period.
How the ₹9,750 Monthly Income Is Calculated
The claim of receiving ₹9,750 per month on a ₹1.5 lakh deposit is typically based on a specific tenure, payout option, and policy structure. In most cases, such income figures are achievable when returns are calculated over a long-term payout period or under promotional illustrations.
The monthly income is not interest in the traditional sense. Instead, it may include a portion of the principal amount along with returns generated by the policy. The exact payout depends on factors such as policy term, age of the investor, selected income option, and prevailing bonus rates declared by LIC.
Key Features of the Plan
One of the main attractions of this plan is predictable monthly income. Investors know in advance how much they will receive and for how long. This makes financial planning easier, especially for retirees or individuals with fixed monthly expenses.
Another key feature is capital protection. Since LIC plans are backed by the government, the risk of default is extremely low. This makes the plan suitable for risk-averse investors.
Some versions of the plan may also include life insurance coverage. In such cases, if the policyholder passes away during the policy term, the nominee may receive a lump sum or continued income benefits, depending on policy terms.
Eligibility and Investment Requirements
Most LIC income plans are available to individuals between 18 and 60 or 65 years of age, depending on the specific product. The minimum investment amount usually starts from ₹1 lakh, making ₹1.5 lakh a common entry point for higher monthly payouts.
The policy term can range from 5 to 20 years. Investors can choose between monthly, quarterly, half-yearly, or annual income options. The longer the commitment, the more stable and predictable the returns tend to be.
Benefits for Salaried Individuals and Retirees
For salaried individuals, this plan can act as a secondary income source that helps manage monthly expenses such as rent, school fees, or loan EMIs. Since the income is fixed, it adds stability to personal finances.
Retirees benefit even more from such plans. A guaranteed monthly income helps cover day-to-day living costs without worrying about market fluctuations. Many retirees use LIC income plans as a replacement for salary after retirement.
Tax Implications You Should Know
Taxation is an important factor when evaluating any income plan. In most cases, the monthly income received from LIC plans is taxable as per the investor’s income tax slab. However, certain plans may offer tax benefits under Section 80C on the invested amount, subject to prevailing tax laws.
The maturity amount or death benefit may also qualify for tax exemption under Section 10(10D), provided the policy meets the required conditions. It is always advisable to consult a tax advisor before investing.
Comparison With Bank Fixed Deposits
Compared to bank fixed deposits, LIC income plans generally offer longer-term income stability rather than short-term flexibility. Bank FDs provide easier liquidity and clear interest rates, while LIC plans lock in funds for a longer duration.
However, LIC plans often provide additional benefits such as life cover and structured payouts, which traditional FDs do not offer. For investors looking for disciplined, long-term income, LIC plans can be more suitable.
Important Points to Consider Before Investing
Investors should carefully read the policy brochure and benefit illustration. Monthly income figures shown in advertisements may be based on assumptions that vary with age and policy duration.
Liquidity is limited in most LIC income plans. Premature withdrawal may attract penalties or reduced benefits. Therefore, this plan is best suited for surplus funds that are not required in the short term.
Understanding whether the monthly payout includes principal repayment is crucial. This helps investors evaluate the real rate of return more accurately.
Is This Plan Right for You
The LIC High-Income FD-style plan is ideal for individuals who prioritize safety, predictable income, and long-term financial planning. It is especially suitable for retirees, conservative investors, and those seeking regular monthly cash flow.
However, investors seeking high returns or short-term flexibility may find better options elsewhere. This plan works best as part of a diversified financial portfolio rather than a standalone investment.
Final Thoughts
The idea of depositing ₹1.5 lakh and receiving ₹9,750 per month sounds appealing, but it should be approached with clarity and realistic expectations. LIC income plans are designed to offer stability, not extraordinary returns. When chosen wisely and aligned with personal financial goals, they can provide peace of mind and a dependable monthly income for years.
Before making any investment decision, always verify the exact policy details with an authorized LIC agent or official source. A well-informed choice ensures that your money works for you in the safest and most effective way possible.