Detailed Comparison Of Life Insurance And PPF

PPF and life insurance are two very different products. Life insurance should always be prioritised because it protects your loved ones in the unfortunate case of your death. You may then focus on other elements of your life, such as your children's education and marriage, as well as your retirement, provided your safety is assured.

After the seventh financial year from the date the account was opened, PPF withdrawals are authorised once a year. There are also limitations on the amount that can be withdrawn. In addition, before the end of the 15-year period, the PPF account cannot be terminated or the entire amount withdrawn. Also, from the third financial year (counting from the year the PPF account was opened), the loan opportunity is available.

The minimum lock-in term for a life insurance policy is three years, after which the policy can be encashed — that is, the policy gains a surrender value. After the policy's lock-in period has ended, a loan or cash value can be taken.

The Public Provident Fund is a type of investment that encourages people to save small amounts of money. A life insurance policy is a type of insurance that protects against unforeseen events such as death. This article compares and contrasts LIC and PPF, as well as the benefits of each financial product.

Difference Between PPF And Life Insurance

Given below are some major differences between the two schemes.

1. Plan Tenure

While PPF is a long-term investment plan (minimum 15 years) that cannot be used for a shorter time, LI can be used for as little as five years. As a result, LI provides more freedom.

2. Loan And Liquidity

Life insurance coverage can be financed. The policy's cash value can be used as collateral to secure a loan, such as a vehicle loan or a personal loan..

A LI policy can be relinquished and the money withdrawn in an emergency, whereas PPF is not as liquid.

3. Flexibility Conditions

Life insurance premiums are fixed and not flexible (one-time/annual/half-yearly/quarterly/monthly). The sum assured and, as a result, the premium due at the time of purchase can be tailored to the buyer's specific requirements and financial capacities.

Both PPF and life insurance programmes can easily be reactivated if you stop investing or paying premiums for whatever reason. PPFs have a 15-year term with the option to extend it in 5-year increments up to a total of 25 years. In life insurance, you have the option of choosing the policy period, subject to certain restrictions and quotas that vary by policy. It's possible that it'll go on till the end of time.

4. Based On Number of Policies/Accounts

A person's ability to purchase several life insurance plans is unrestricted. However, each person is only allowed to have one PPF account.

Take Away

ULIPs, for example, are a type of insurance that also provides investing opportunities. When it comes to expense ratio, though, they are on the high end of the scale. Furthermore, there are numerous hidden fees. As a result, it is recommended that people separate their investment and insurance needs by purchasing a term policy while investing in PPF.

You may also like to read - PPF Or ELSS? Which Is A Better Investment Option?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.