Public Provident Fund vs LIC Jeevan Labh

Difference Between PPF and LIC Jeevan Labh Policy

Public Provident Fund and LIC Jeevan Labh are different investment options, each serving a unique purpose. PPF focuses on building a savings corpus without providing life cover, while LIC Jeevan Labh is specifically designed to offer life cover in case of the policyholder's demise along with a savings component. Consequently, the significant dissimilarities between the two arise from their primary objectives and features. Let's explore the significant grounds that set them apart.

LIC’s Jeevan Labh vs. PPF

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Now that we are aware of the key differences between the two, let’s explore each option in some detail and see if there are any similarities.

Brief on Public Provident Fund (PPF)

The Public Provident Fund Scheme is a government of India-backed long-term investment scheme that offers guaranteed returns. As a PPF account holder, you deposit an amount and receive interest on that investment at a rate annually revised by the government. The returns entitled to you help in maximizing your savings and plan for your future goals.  

Eligibility Criteria For a PPF Account

Benefits of Public Provident Fund

PPF, as a financial instrument, has various attractive benefits for the account holder. Some of the benefits of PPF account investment are:

• Deposit Amount - The PPF scheme allows you to deposit a minimum sum of Rs.500 up to a maximum amount of Rs.1.5 Lakhs in a year. The minimum amount that has been set ensures affordability for people belonging to the low-income bracket. The opening balance for PPF is Rs. 100.

• Rate of Interest - The rate of interest on your public provident fund is revised by the Ministry of Finance every quarter. For the current quarter, the interest rate is set to 7.1%. It is noteworthy that this is higher than most other schemes that are currently available. 

• Tax Savings - The investment that you make is eligible for tax deductions. Further, the interest earned and the maturity proceeds are also exempt from tax under section 80C of the Income Tax Act 1961. 

About LIC Jeevan Labh Policy

LIC’s Jeevan Labh is an endowment-based life insurance policy. The primary purpose of the policy is to cover the risk of premature death of the life assured. The policy also comes with a savings aspect, wherein you are entitled to maturity benefits on surviving the duration of the policy.

Eligibility Criteria For a LIC Jeevan Labh Policy

Benefits of LIC Jeevan Labh Policy

The Jeevan Labh LIC plan also offers various benefits discussed below:

• Death Benefit - Death benefit is payable on the death of the life assured. The sum assured on death is payable as either 7 times the annual premium or the absolute sum assured, whichever amount is higher. 

• Maturity Benefit - Even on surviving till the maturity of the policy, the life assured receives an assured sum in the form of maturity benefit. 

• Death and Maturity benefits in Instalments - Instead of a lump sum amount, you can choose to have the death benefit disbursed in installments. Using the Settlement option, this can be done in case of the maturity payout as well. You can receive these amounts in monthly, quarterly, half-yearly and yearly modes.  

• Additional Bonus - LIC Jeevan Labh participates in the profits of the company, due to which policyholders receive simple reversionary bonuses and any final additional bonuses applicable. In the death and maturity payout of Jeevan Labh policy LIC profits are included as bonus amounts. These bonus amounts are subject to company valuation every year. 

• Enhanced Protection with Riders - LIC Jeevan Labh Plan comes with four additional riders namely, Accidental Death and Disability Benefit Rider, Accident Benefit Rider, New Term Assurance Rider, Premium Waiver Benefit Rider. These riders provide payouts during unfavourable circumstances such as accidental death or disability or when the policyholder is unable to pay future premiums.

LIC Jeevan Labh vs. PPF - Common Grounds

While LIC Jeevan Labh and the Public Provident Fund are both vastly different in terms of their purpose and features, certain aspects show similarities between the two.

• Reliability
  PPF is a government-backed scheme, which means it assures risk-free and guaranteed returns. Therefore, it is considered reliable and one of the safest savings policies.
  LIC’s Jeevan Labh is offered by the government-owned entity, Life Insurance Corporation of India, which makes it a reliable product. LIC currently occupies the largest market share in the life insurance space, which can be attributed to it being trustworthy among the masses. 

• Zero Market Risks
  Both LIC Jeevan Labh and the PPF scheme are non-linked products that make them free from market fluctuations. Therefore, the risk factors are significantly lower than market-linked investments. Both options are suitable for risk-averse individuals. 

• Enhanced Savings
  Both LIC Jeevan Labh and PPF offer the scope of increasing one’s savings corpus. While your PPF account is a traditional savings scheme with a high-interest rate, LIC Jeevan Labh offers life cover with additional returns as a means for increased earnings. However, the rate of return for LIC policies is lower. 

• Loan Facility
  Both the schemes allow policyholders to avail of loan facilities, subject to the sum assured and the deposit amount. However, the terms and conditions under each product differ, as discussed in the comparison.

• Tax Benefits
  Policyholders of LIC Jeevan Labh can avail of tax benefits under the Income Tax Act of 1961. Similarly, with a PPF account, one can enjoy tax exemptions on the deposit amount, the interest, and the maturity payout. 

Summing up!

Both the investment options discussed have unique features catering to different circumstances. If you're looking for long-term savings with tax benefits and relatively stable returns, PPF might be suitable. With the LIC Jeevan Labh plan, you provide financial security to your family, even in your absence and receive a maturity benefit if you survive the policy term. Additionally, you earn additional benefits in the form of interest and bonuses with both options. It's crucial to consider your financial goals, risk tolerance, and investment horizon while choosing between PPF and LIC Jeevan Labh.

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