Plan your investment
What Our Plans Cover
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Interest reinvested at the contrac...
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A single payment of principal and...
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Tenures from six months to ten yea...
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Nomination facility
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Loan or overdraft against the depo...
Who Can Consider This Plan?
- Indian resident individual, HUF, trust, firm or company
- NRIs, through NRE, NRO or FCNR deposits
- Minors, through a guardian
- PAN, required to avoid a higher rate of tax deduction at source
- Completed KYC with the institution
What May Not Be Covered?
- Periodic income — nothing is paid until maturity
- Deferral of tax, which accrues annually regardless
- The full rate on premature withdrawal
- Any protection against inflation
Always check the policy wording before you commit.
Why Choose Wealth & Covers?
- Expert advice to choose the right plan
- Plans from leading investments companies
- Hassle-free process and documentation
- End-to-end support, including claim assistance
- Dedicated relationship manager
- Expert Guidance Personalised advice from experienced investments professionals.
- End-to-End Support From choosing the right plan to claim assistance, we are with you always.
- Claims Assistance Hassle-free claim support to ensure you get what you deserve.
- Transparent Process Clear information, easy documentation and a hassle-free experience.
Overview
A cumulative deposit reinvests the interest instead of paying it out, so interest earns interest and the whole amount is received at maturity. Over a long tenure that compounding produces a materially higher total than the same rate paid out periodically.
The point that catches savers out is tax. Interest is taxable in the year it accrues, not the year it is received. On a five-year cumulative deposit you owe tax annually on interest you have not yet been paid, and the bank deducts tax at source on the same basis.
That does not make cumulative deposits a poor choice — the compounding is real and worth having. It means the cash to pay the tax has to come from somewhere else, which is a planning point rather than a defect.
Who should consider it
Savers who do not need periodic income and want the compounding. Savers building towards a dated obligation. Anyone whose other income comfortably covers the annual tax on accrued interest.
Benefits
- Interest compounds, producing a higher total at maturity
- A single maturity amount, simple to plan around
- No periodic payout to manage or reinvest
- Available across all tenures
- The same rate as a payout deposit, with compounding on top
- Loan against the deposit remains available
What is included, and what is not
Read the right-hand column first. It is the one that tends to surprise people later.
Included
- Interest reinvested at the contracted rate
- A single payment of principal and accumulated interest at maturity
- Tenures from six months to ten years
- Nomination facility
- Loan or overdraft against the deposit
Not included
- Periodic income — nothing is paid until maturity
- Deferral of tax, which accrues annually regardless
- The full rate on premature withdrawal
- Any protection against inflation
Terms vary between providers and between plans from the same provider. The offer document you receive is what governs — we will walk you through it before you commit.
How it works with us
- 1 We work out what the deposit is actually for An emergency fund, a dated obligation, or long-term savings. Only the first two are really jobs for a deposit.
- 2 Rates compared across banks, small finance banks and corporates The spread is wider than most savers realise, and so is the difference in safety. We show both sides.
- 3 Tenure and payout structured around your tax position Cumulative or non-cumulative changes when the tax falls due. For some savers that matters more than the rate.
- 4 Opened, with nomination and Form 15G/H handled The two administrative steps savers skip and later regret. We complete both at opening.
- 5 Maturity tracked, and reinvestment decided deliberately Auto-renewal at whatever rate happens to prevail is a decision by default. We flag maturities so it is a decision by choice.
Important considerations
The things a brochure tends to leave out. Read these before you decide.
- Tax accrues annually on interest you have not received. Budget for that from other income rather than discovering it at filing.
- Tax deducted at source reduces the amount actually compounding, so the effective return is slightly below the arithmetic on the gross rate.
- Over long tenures the compounding advantage over a payout deposit is substantial. For money you genuinely do not need, this is the right structure.
- Check the compounding frequency. Quarterly compounding is standard and produces a better effective yield than annual.
- If you need income, this is the wrong structure. A non-cumulative deposit pays out; this one does not until maturity.
Documents required
- PAN card
- Identity proof — Aadhaar, passport or voter ID
- Address proof
- Recent passport-size photograph
- Existing bank account details, where opening with your own bank
- Form 15G or 15H, where applicable, to avoid tax deduction at source
- Nomination form
Frequently Asked Questions
When do I pay tax on a cumulative deposit?
Annually, as the interest accrues, not when you receive it at maturity. The bank deducts tax at source on the same basis. This surprises savers who expect the tax to fall due with the payment, so plan for the cash to come from elsewhere.
How much better is compounding than a payout deposit?
Meaningfully over a long tenure, because interest earns interest. Most banks compound quarterly, and over five years that produces a total noticeably above the same rate paid out periodically without reinvestment.
Does TDS reduce the compounding?
Yes. Tax deducted at source is taken out of the accrued interest, so slightly less remains to compound. The effective return is therefore a little below what the gross rate suggests.
Can I take a loan against a cumulative deposit?
Yes, at a small spread over the deposit rate, and this is usually far better than breaking it. The deposit keeps compounding while you borrow against it.
Should I choose cumulative or payout?
Cumulative if you do not need the income and want the compounding; payout if you are living on the interest. Many savers hold both — cumulative for capital they are growing and payout for what funds expenses.
Want a shortlist instead of a catalogue?
Tell us the situation and an advisor comes back with two or three options that actually fit — and names what each one gives up.