What should be taken – Life Insurance or PPF ??, this article talks about the Similarities, Benefits, Differences in the Money to be given or invested for Life Insurance and PPF. This topic has been very much hit in the individuals that what should be taken and which would give high returns with additional benefits. So I had written this article for those who are confusion for what to do. After reading the full article, you would be crystal clear about what decision to be taken. Now check more details about “What should be taken – Life Insurance or PPF ??” from below
What should be taken – Life Insurance or PPF ??
Both the policies or may be known as deposits are very specifically for different purposes. So any one should not misunderstand and take any decision. PPF is such a scheme which has been introduced by Government of India for exclusively investment purpose. While Life insurance has a main purpose of covering the life of the individual. Nowadays most of the individual have taken the insurance as investment option, but reality it is not. Both are to be taken for the different purposes rather the latter one is only the output or promotions for the taking the insurance.
Similarities in Life Insurance and PPF:
- Both the Life insurance and PPF are for the long term period. Life insurance is for minimum of 5 years term while PPF is for minimum 15 years of term.
- Loans can be availed from any of the policies. It may differ from policy to policy that how much amount of loan of the deposit amount can be availed.
- Both the deposits can be availed as tax exemption under Section 80C of the Income Tax Act.
- The purpose for both the policies are different. The purpose of one is to insure the life of the individual while that of other is to ensure proper returns from the amount invested.
- The policy in case of PPF cannot be surrended unless in case of Death of the person while in case of latter, it can be surrended after some periodical point of time.
- The Lock in period for policy in case of PPF account is of 5 years and that in case of Life insurance policy is of 3 years. Lock in period basically means that you cannot withdraw the money or close the account in this period of time from the time of opening the account.
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Benefits of PPF over Life Insurance:
- As a purpose of PPF, individual can always take PPF as option rather to take Life insurance. Because it offers high rate of return such high as 8% to 9%, which is far better than Life insurance. There is no capital risk also involved in investing it as it a government initiative.
- The minimum investment required in case of PPF is as low as Rs. 500 which is very much less as compared to Life Insurance where every one has to pay prefix amount as premium to the insurance companies.
- There is some extraordinary withdrawal facilities available in case of any any emergency during which the account holder needs to withdraw.
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Benefits of Life Insurance over PPF:
- Life insurance is very much liquid asset as it can be surrended any time during the time period of deposit of the money and it is having the lock in period of 3 years only in comparison of 5 years in PPF.
- Life insurance can be from minimum period of 5 years which is shorter in comparison of 15 years which is the criteria of PPF.
- The best and the main benefit of Life insurance is that they cover the life of the individual in case of death or any contingencies and saves from economical loss in the family. This is the best facility which is provided by the Life insurance policies which PPF does not.
The policy to be taken differs from the person to person and what the need the person is having and what is the purpose of taking the same. But nowadays everybody in India is covered by the Life insurance as it is highly beneficial, because in todays world, there are many contingencies for the life which may be covered by them.
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