PPF (Public Provident Fund) and life insurance policy, LIC’s Jeevan Labh are both different kinds of investment options, wherein the former offers fixed-income savings opportunities, while the latter offers life coverage plus savings.
Save upto ₹46,800 in tax under Sec 80C
Inbuilt Life Cover
Tax Free Returns Unlike FD
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
Let’s study the differences that make these two options unique and how you can benefit from either one.
A comparison between a public provident fund and LIC’s Jeevan Labh will give us several dissimilarities given that both are completely different investment options and serve different purposes. PPF allows you to create a savings corpus without any life cover. On the other hand, LIC’s Jeevan Labh was designed to offer life cover against death of the life assured.
Let’s understand the major grounds for differences between the two:
|S. No.||Criteria||PPF||LIC Jeevan Labh|
|1||Type of scheme||Investment plus tax-saving vehicle||Life insurance plus savings vehicle|
|2||Who should buy it?||Anyone looking for a high-interest savings scheme||Primarily targeted for individuals with dependents|
|3||Rate of return||High at 7.1% interest rate||Lower than PPF and subject to company profits|
|4||Policy maturity||15 years||16 years/21 years/25 years|
|5||Renewal / extension||Can be extended by 5 years post maturity||The policy can be renewed after maturity|
|6||Loan facility||From 3rd financial year up to 6th financial year||Only after two years’ premiums have been paid|
|7||Tax benefit||EEE tax benefits (deposits, interest, and maturity amount are exempt from taxes).||Premiums and maturity benefits are exempt from taxes under Section 80C and Section 10(10D) of the Income Tax Act, 1961, respectively.|
|8||Investment Amount||Annual deposit of minimum - Rs. 500, and maximum - Rs. 1.5 Lakhs||Premiums are fixed as per the sum assured.|
|9||Death Benefit||Not applicable||Sum assured death is payable to the beneficiary assigned by the policyholder|
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“Tax benefit is subject to changes in tax laws. Standard T&C apply.”
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 between the two.
The public provident fund is a government of India-backed long-term investment scheme that offers guaranteed returns. As a PPF account holder, you are expected to deposit an amount and receive interest on that investment at a rate annually revised by the government. The returns that you are entitled to allow you to maximize your savings and plan for your future goals.
PPF as a financial instrument features a lot of attractive benefits for the account holder. Some of the most beneficial ones 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.
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.
Let’s now briefly discuss LIC Jeevan Labh and try to study the key benefits offered by it.
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. LIC Jeevan Labh offers guaranteed financial protection and offers the sum assured on death or maturity of the policy.
The policy offers the following benefits.
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.
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. This extra sum is payable along with death and maturity benefit, however, is subject to company valuation every year.
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.
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 in the country.
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.
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.
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.
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 between the two.
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.
A PPF account allows you to make regular deposits, so you can grow a substantial corpus to fund future needs. With the LIC’s Jeevan Labh Policy, you can secure the financial future of your family in the event of your death. With both options, you earn additional benefits in the form of interest and bonuses.
Experts believe that both options are equally beneficial and serve important purposes. Therefore, it is best if you try to invest in both options and create a well-rounded financial backup for yourself and your family.
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