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Bajaj Finance FD can Give Better Returns than Life Insurance

by Gaurav Khanna - 16 Feb 2021, Tuesday 1715 Views Like (0)
Bajaj Finance FD can Give Better Returns than Life Insurance

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

Life Insurance



Any tenure between 12-60 months

Minimum 10 years


Minimum investment amount/premium

Rs 25,000

Depends on terms and conditions of the policy


Maturity date

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.


Premature Withdrawal

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

  1. Returns
  • Currently, Bajaj Finance FD carries an interest rate of 6.60% per annum plus an additional 0.10% if FD is opened online. The rates of return offered to senior citizens is attractive too at 7.25% per annum.

  • Life Insurance policies on the other hand involve cash outflows in the form of premium payments for a long period of time. The lump sum amount is either fixed on in case of ULIPs, linked to market performance. So returns are uncertain.

  • In FD schemes, you know your maturity amount before investing. The FD interest calculator is the best tool to know your maturity amount given the principal amount to be invested, investment tenure and applicable rate of interest. Knowing lump sum amounts beforehand may not be possible with insurance policies.

  1. SDP

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:-

  • Monthly maturity scheme: Under this scheme, you need to invest a monthly amount of Rs 5000 or above. The prevailing interest rate on the date of investment will be the applicable interest rate for the monthly deposit. You can fix different tenures for each monthly deposit. 

  • Single maturity scheme: Under this scheme, all your periodic deposits will have the same maturity date. This scheme is ideal for building a lump sum corpus.

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.