Fixed Deposits(FD) are term deposits paying a prescribed rate of interest for a specified investment period. They carry minimal risk compared to market-linked instruments and therefore are considered a safe haven for money with assured returns. Bajaj Finance Limited is one of the reputed NBFCs in the market offering attractive rates of return on fixed deposits.
Life Insurance, on the other hand, is a risk cover. It is an agreement between the insurer and the insured (policyholder) wherein the insurer promises a lump sum amount to the policyholder’s beneficiary in the event of the policyholder’s untimely demise in exchange for periodic/lump sum premium payments. Unit-Linked Insurance Policies (ULIPs) are market-linked investment avenues with inherent life insurance policy features.
Guaranteed plans from Bajaj Finance Fixed Deposits can give better returns than life insurance because of the following differences :-
Point of Distinction
Bajaj Finance FD
Any tenure between 12-60 months
Minimum 10 years
Minimum investment amount/premium
Depends on terms and conditions of the policy
Depends on chosen investment duration
Usually after 20-25 years
Guaranteed returns at a predetermined rate of interest for a specified investment time-frame.
Returns depend on year end bonus declarations and market performance in case of Unit-Linked Life Insurance policies.
Permitted after a compulsory lock-in period of 3 months.
Permitted after mandatory lock-in period is over. Obligatory lock-in period varies between 3-5 years for different life insurance policies.
Loan against investment
Loan amounts up to 90% of term deposit value can be procured by pledging the fixed deposits.
Only some insurance policies have this feature.
Additional factors that make Bajaj Finance FD a better investment option
One of the unique term deposit plans offered by Bajaj Finance is the Systematic Deposit Plan (SDP). SDP plans are ideal if you are risk averse and worried about interest rate fluctuations. Conceived on the lines of Systematic Investment Plans of market-linked securities, SDP is a good investment option to battle interest rate risks.
Bajaj Finance offers two types of SDP schemes. They are as follows:-
3. Safety of Investment
Bajaj Finance Limited enjoys high credit ratings of ‘AAA’ from CRISIL and ICRA. It also has a high international credit rating of ‘BBB’ from S&P Global. Thus, your money is in safe hands.
Therefore, you must opt for Bajaj Finance FD over life insurance to maximize your returns.