The plain vanilla bank fixed deposit is getting a makeover. Thanks to Budget 2019, wherein the TDS limit has been proposed to be hiked from Rs 10,000 to Rs 40,000 a year, banks are expected to make their FD schemes more lucrative to attract funds. Taking the lead, ICICI Bank has introduced FD Xtra, a range of innovative term deposits that includes three major innovative features in them \u2013 free term life insurance with fixed deposit, fixed deposits with auto-investment in mutual fund SIPs and an option to take the maturity amount in installments. \u2018FD Xtra\u2019 comes with a range of innovative Fixed (FD) and Recurring (RD) deposits with exclusive new benefits to customers. The new range of deposits will be available to customers within the next few days. Speaking on the occasion, Pranav Mishra, Head \u2013 Retail Liabilities Group, ICICI Bank, said, \u201cThese deposits are aligned to various life-goals of a customer like protection through a term plan, option of investing in equity markets through mutual fund SIPs or planning for requirements like higher education, retirement corpus, travel among others.\u201d Also Read: What is your post-Budget 2019 income tax outgo? Calculate now Here are the three variants of the FD Xtra scheme and how they work: 1. FD Xtra- FD Life The first of the \u2018FD Xtra\u2019 deposits is named \u2018FD Life\u2019. It offers individuals, who are 18-50 years of age, the dual benefit of investment growth via FD and security through a free term life insurance of one year for the FD holder. The combo offers the unique benefit of a free term life insurance from ICICI Prudential Life Insurance of Rs 3 lakh on opening an FD of at least Rs 3 lakh for a tenure of minimum two years. The FD holder has the option to renew it next year. 2. FD Xtra- FD Invest The next set of industry first deposits, termed \u2018FD Invest\u2019, will help customers invest the interest earned on FDs in monthly Systematic Investment Plans (SIPs) of a mutual fund of their choice from ICICI Prudential Asset Management. Available with a FD of at least Rs 2 lakh for a minimum tenure of one year, \u2018FD Invest\u2019 safeguards principal amount. Simultaneously, it offers an opportunity to customers to invest in mutual funds through the interest generated by the FD. 3. FD Xtra- FD Income Another variant in the FD Xtra range of deposits is \u2018FD Income\u2019. Available in the form of FDs and RDs, they offer individuals the flexibility of receiving their maturity proceeds in the way that suits their goals. One may choose to receive the entire maturity amount as a monthly income for a tenure of their choice. Alternatively, they can choose to receive 30% of the amount as lump sum on maturity of the investment and the remaining 70% as a monthly income for a tenure of their choice. Maximum tenure for all term deposits, including investment phase and payout phase, is 10 years. Here is how it works: i. FD with Monthly Income: This facility enables customers to receive the maturity amount of the deposit as a monthly income for a tenure of their choice. This feature may help in meeting life stage needs like retirement among others. For example, Rajeev, a private sector employee, has received a significant retirement corpus. FD Xtra can help him in getting a regular monthly income. For example, he invests Rs. 5 lakh in FD with Monthly Income for a tenure of 2 years as the FD investment phase. Post the investment phase, he will receive a monthly income (before TDS) of Rs. 25,911 for 2 years (basis current prevailing ICICI Bank FD interest rates as on February 6, 2019). He has the option of selecting the FD investment phase and the payout phase in any combination upto an aggregate of 10 years. ii. FD with Lump Sum and Monthly Income: This feature enables one to receive a lump sum amount at the end of the investment phase. The rest of the amount is available every month in the payout phase. Example: Suparna, a homemaker, wishes to enroll herself into a cooking course and take her family out on a holiday. Suparna has Rs. 5 lakh, which she invests in FD with lump sum and monthly income. Post the completion of the investment phase of 2 years, she will receive Rs. 170,863 as lump sum amount and Rs. 17,895 as a monthly income in the payout phase for the next 2 years (basis current prevailing ICICI Bank FD interest rates as on February 6, 2019). This will help Suparna in going on her dream holiday and pursuing the cooking course. iii. RD with Monthly Income: Designed on the similar lines of FD with monthly income, this feature enables one to meet their life stage goals by saving systematically and gaining returns as a monthly income. Example: Ritesh, an HoD in a renowned colleg with over 25 years of work experience, is planning for his retirement. He wishes to save for post-retirement expenses and daughter\u2019s higher education. With a steady income, Ritesh decides to invest Rs. 20,000 every month in RD with monthly income for a period of 3 years as the investment phase. His total investment in 3 years will be Rs. 7.2 lakh. Post the investment phase, he will receive a monthly income (before TDS) of Rs. 35,788 for 2 years, which is the payout phase. This will help him sort his finances post retirement. iv. RD with Lump Sum and Monthly Income: This feature enables one to receive a lump sum amount at the end of their investment tenure and the remaining amount as a monthly income during the payout tenure. Example: Ronit works in a renowned MNC and wishes to buy his dream car in the coming years. With a steady income, he decides to save Rs. 20,000 every month for a period of 3 years using the RD with lump sum and monthly income facility. He will save Rs. 7.2 lakh during the investment period of 3 years. Post the completion of this period, he will receive a lump sum amount of Rs. 239,192 which will assist him with the down payment for the car. After which, he will receive Rs. 25,052 as a monthly income for 2 years during the payout phase. This will in turn assist him in paying the EMI for his car. What to do Bank fixed deposit (FD) suits ultra-conservative investors who wish to preserve their principal amount. Even though the TDS limit is proposed to be enhanced, the interest earned from FD is fully taxable as per one's income slab. This results in low post-tax return in FDs. Also, do not base your investment decision solely on the fact that a free life cover and that too for a limited amount, is available in this FD. Ideally one should have life cover of at least ten times of take-home annual pay. Explore other bank's interest rates and take an informed decision based on the time horizon you need to lock-in your funds.