LIC vs FD Calculator 2026

Compare post-tax returns of bank Fixed Deposits with tax-free traditional LIC policy maturity payouts. Evaluate which saving tool yields more for your income tax bracket. Updated for 2026.

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Is LIC better than FD for saving tax?

Yes, for individuals in the 30% tax bracket. Bank FD interest is taxed annually at 31.2% (including cess), dropping a 7% nominal rate to 4.83% net. Qualifying LIC policies are tax-free under Section 10(10D) and return 5.5% - 5.8% p.a., making LIC yields higher on a post-tax basis for high earners.

LIC vs FD: The Impact of Income Tax Slabs

When comparing Fixed Deposits and LIC plans, tax treatment is the critical differentiator. FDs compound quarterly, but the interest is taxed on an accrual basis. You must pay tax on the interest earned every year, even though you only receive the payout on maturity. This annual tax outflow reduces the compounding power of the FD.

Traditional LIC endowment policies accrue reversionary bonuses annually, which are paid out in full as a single, tax-free check at maturity. However, FDs offer complete liquidity, allowing you to withdraw money in emergencies. Traditional insurance policies carry heavy surrender penalties if closed early.

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एलआईसी बनाम एफडी कैलकुलेटर — LIC vs FD in Hindi

एलआईसी बनाम बैंक एफडी कैलकुलेटर (LIC vs FD Calculator) 2026. वार्षिक निवेश राशि और टैक्स स्लैब डालकर दोनों निवेशों पर मिलने वाले मैच्युरिटी रिटर्न की तुलना करें।\n\nउदाहरण के लिए, यदि आप प्रति वर्ष ₹50,000 का निवेश 20 वर्षों के लिए 30% टैक्स स्लैब में करते हैं, तो 7% ब्याज वाली एफडी पर टैक्स काटने के बाद कुल ₹14.8 लाख मिलेंगे। वहीं, एलआईसी (₹44/1000 के जीवन आनंद दर पर) टैक्स-फ्री मैच्युरिटी होने के कारण लगभग ₹16 लाख देगी। कम टैक्स ब्रैकेट वालों के लिए एफडी आमतौर पर बेहतर होती है, जबकि उच्च टैक्स ब्रैकेट वालों के लिए एलआईसी फायदेमंद साबित होती है।

Frequently Asked Questions

Bank FDs offer nominal interest rates (6.5% - 7.5%) which are higher than typical traditional LIC yields (5% - 5.8%). However, bank FD interest is fully taxable every year at your regular tax slab rate. For someone in the 30% tax bracket, a 7% FD yields only 4.83% post-tax. Because LIC maturity is tax-free under Section 10(10D), the net return can be higher than FDs for individuals in higher tax brackets.

Section 10(10D) makes the entire maturity amount (including accrued bonuses) of qualifying LIC policies completely exempt from income tax. In contrast, bank FD interest is subject to TDS (Tax Deducted at Source) and must be declared in your tax returns, incurring yearly tax liability.

FD interest is added to your annual income under "Income from Other Sources" and taxed at your slab rate. If your total interest across a bank exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year, the bank deducts 10% TDS (or 20% if PAN is not updated).

Bank FDs offer significantly better liquidity. You can break or close a bank FD prematurely within minutes (paying a minor 0.5% - 1% penalty on interest). LIC policies are highly illiquid; surrendering them before 2 years yields zero returns, and surrendering later results in a substantial financial loss (often 30% to 50% of paid premiums).

Yes, both qualify for Section 80C tax deductions up to ₹1.5 Lakhs per year (only under the old tax regime). For FDs, you must buy a specific 5-Year Tax-Saver FD (which has a strict 5-year lock-in). LIC premiums for traditional life cover also qualify for Section 80C.

From a pure return and protection standpoint, buying a cheap term insurance plan for life cover and investing the remaining funds in high-yield bank FDs or mutual funds is generally superior. Term plans offer very high coverage at low costs, and FDs offer liquidity and transparency that traditional insurance plans lack.

Yes. The calculator uses base premiums before GST to compute the actual XIRR compound return, providing a fair yield comparison between the two investment channels.

Senior citizens (age 60+) earn an extra 0.50% interest on bank FDs, and their TDS threshold is higher (₹50,000/year). If you are a senior citizen in the 0% or 5% tax bracket, bank FDs will almost always yield better returns than LIC policies.

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