Prices Increasing soon Prices Increasing Soon

Comparison Between Fixed Deposit and Life Insurance

When it comes to financial planning, there are various insurance products available in the market wherein you can invest and get higher returns on your investments. Out of all the products available, Fixed Deposits (FDs) and Life Insurance are the two most popular investment products. Life insurance is an insurance scheme, and Fixed deposit is a savings product. However, both offer certain benefits and cater to different financial goals. Let’s compare fixed deposits vs life insurance, explore their features and benefits, and learn more about their types to help you make an informed decision.

Read more
Gets ₹1 Cr. Life Cover at just
COVID-19 Covered
The Policybazaar Advantage
Dedicated claim support for family FREE
Upto 10% discount for buying online
Only certified experts will call you on 100% recorded lines
We are rated~
58.9 Million
Registered Consumer
Insurance Partners
26.4 Million
Policies Sold

#All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply

By clicking on "View plans" you agree to our Privacy Policy and Terms of use

~Source - Google Review Rating available on:-

Life is Unpredictable! Protect your family’s future
Get ₹1 Crore Life cover starting from ₹384/month+
We don’t spam
Check Your Premium Now
Please wait. We Are Processing..
Get Updates on WhatsApp
The Policybazaar Advantage
Policybazaar Advantage Icon
Dedicated claim support for family FREE
Policybazaar team will help and support you at the time of claim. A personal claim handler from our team of experts will get in touch with you when your nominee applies for a claim on our website.
Policybazaar Advantage Icon
100% calls recorded to ensure no mis-selling
We will make sure you get what is promised by the advisors. We conduct regular monitoring of our calls to make sure you get the best experience.
Policybazaar Advantage Icon
Exclusive lifetime discount upto 5% for buying online
The discounts will be valid for the entire policy payment term and is not available if you choose to buy the insurance through offline agents.
Policybazaar Advantage Icon
Advisors available in your city
Our advisors are available in more than 55 cities across India and can help you at your doorstep in understanding the plans and in documentation.
Policybazaar Advantage Icon
Refund at the click of a button
In case you aren’t happy with your purchase, you can cancel your policy hassle-free at the click of a button. We will help you with the cancellation and refund of your policy.

Comparison between Fixed Deposit (FD) and Life Insurance 

Here is a detailed comparison between Fixed Deposit and Life Insurance:

Parameters Fixed Deposit Life insurance
Tenure 7 days to 10 years 5 years to 40 years which can be extended till 99/100 years of age
Investment amount Starts at Rs. 1000 and has no restriction on maximum investment  Differs from plan to plan and depends on various factors like age, policy term, and health conditions of the life assured.
Returns Returns are guaranteed  The returns may or may not be guaranteed at the time of policy purchase, and the bonuses (if applicable) will be declared at the year's end
Tax Benefits You can claim tax benefits under section 80C* You can claim tax benefits u/s 80C, 80D, and 10(10D) of the IT Act, 1961
Premature withdrawal You can make partial withdrawals without breaking the FD. The returns may be affected along with the possible penalty charges. You can make partial withdrawals as per the policy’s T&Cs after 3 to 5 years of the lock-in period, given that the policy is still in force and the premiums are duly paid.

* Tax saving benefit under section 80C is available only with Tax saving FDs.

one crore term plan

Term Plans


Life Cover

@ Starting from ₹ 16/day+


Life Cover

@ Starting from ₹ 8/day+


Life Cover

@ Starting from ₹ 12/day+

What are Fixed Deposits (FDs)?

Fixed deposits (FDs) are deposit accounts offered by various banks in which you can invest a sum of money for a fixed period and receive a fixed interest on the invested amount. At the end of this fixed tenure, you receive the invested amount along with the applicable interest. These are primarily used to earn a guaranteed return on investment.

What is Life Insurance?

On the other hand, life insurance is a financial product designed to provide financial protection to individuals and their beneficiaries in the event of death or other specified events. It offers a death benefit or maturity benefit, ensuring the financial security of loved ones.

one crore term plan

Secure Your Family Future Today


Term Plan Starting @ ₹449/month+

Get an online discount of upto 10%+

Compare 40+ plans from 15 Insurers

+Standard T&C Applied

Fixed Deposit (FD) vs Life Insurance - Which is Better?

Let us take a look at how fd vs insurance differ from each other and which is better for your needs:

  • One of the main differences while comparing FD vs insurance is that FDs are designed to meet your investment requirements. On the contrary, life insurance covers your risk and offers financial security to your family members in your absence.

  • It is also essential to look at the investment term goal. FDs are considered a good option for varying financial needs that include short and long term investment goals. On the other hand, life insurance plans are best suited to fulfill your long term goals.

  • The returns on fixed deposits can be calculated beforehand, but for various life insurance plans, such as ULIPs, it is difficult to predict the benefit amount because the returns are subjected to market situations.

  • You can invest an amount as small as Rs. 1000 in a fixed deposit, whereas, in life insurance, the lowest premiums applicable depend on a variety of factors like age, type of life insurance, and policy and premium payment terms.

  • Both fd vs insurance offers the chance of making early withdrawals in case of a financial emergency. With fixed deposits, you can make withdrawals by notifying the bank, whereas with life insurance, you can make withdrawals only after the end of the lock in period.

Features and Benefits of Fixed Deposit (FDs)

FD is an investment product that is offered by major financial insuitutions that includes NBFCs, banks and others. You can easily get benefits by investing in FDs. Here are some of the benefits of FD are:

  • Invest for a fixed term when you opt for a FD

  • Higher interest rate with fixed deposits as compared to the earned interest on your savings account

  • Returns on FDs are guaranteed in case you do not withdraw prematurely

  • You can opt for a loan against your FDs and receive the cash in case of need

  • Flexible pay out options- Monthly, quarterly, half-yearly, yearly and at maturity date. This helps you to get your returns varying requirements as per your preference.

  • Get flexible tenure with flexible deposits. The term generally ranges from 1 week to 10 years

  • You can buy more than one FD if you have different goals to fulfill.

Features and Benefits of Life Insurance

Here are the benefits of buying a life insurance plan:

  • Get risk coverage with your life insurance policy that provides financial protection for the rest of the family members in case of the death of policyholder.

  • The tenure of life insurance is long

  • Different types of life insurance plans available are term insurance plans, retirement plans, whole life insurance plans, unit-linked insurance plans, senior citizen plans, etc.

  • Life insurance not only ensures a pool of savings, it also works as financial protection for your beneficiaries/nominees in case of your unforeseen death.

  • Get tax benefits on your life insurance plan u/s 80C and on your term plan u/s 80D of the ITA, 1961. Under section 80C, enjoy deductions upto Rs. 1.5 Lacs.

Types of Fixed Deposit vs Life Insurance

Types of Fixed Deposits

Here is a list of all the different types of fixed deposits available in India

  • Regular FDs

  • Tax Savings FDs

  • Senior Citizens FDs

  • Flexi FDs

Types of Life Insurance

Here is a list of different types of life insurance plans available in India

  • Term life insurance

  • Whole life insurance

  • Money back plans

  • Endowment plans

  • Retirement plans

  • Unit-linked insurance plans

  • Child insurance plans 

Wrapping It Up!

The comparison between fixed deposit and life insurance shows that both financial products have their own set of features and benefits. While fixed deposits help you create wealth and receive guaranteed benefits on the invested amount, life insurance plans help you secure the financial future of your loved ones in case of an eventuality. You can choose to invest in either or both investment tools to receive the required benefits.


  • Q: Does Fixed Deposit provide pure risk cover?

    Ans: No, Fixed deposits do not provide any pure risk cover. This means your family would not receive any benefit amount in the event of your untimely death. However, they can receive guaranteed returns on the investments you made in the fixed deposit.
  • Q: What is the minimum duration I can invest in a Fixed Deposit?

    Ans: The minimum duration you can invest in a fixed deposit is for a week.
  • Q: Can fixed deposits be withdrawn?

    Ans: Yes, you can withdraw your fixed deposit in case of financial emergencies.
  • Q: Does life insurance provide tax benefits?

    Ans: Yes, with life insurance plans, you can claim life insurance tax benefits under sections 80C, 80D, and 10(10D) of the IT Act, 1961 as per the prevailing tax laws.
  • Q: What is the main difference between fd vs insurance?

    Ans: The main difference between fd vs insurance is that fd is an investment tool designed to help you save for the future, whereas life insurance is an insurance product designed to help you protect your loved ones in the event of your unfortunate death.
  • Q: Is a loan facility available in fixed deposits?

    Ans: Yes, you can avail loans against your fixed deposit in case of a financial emergency.
  • How to calculate the term insurance premium online?

    Ans: You can easily calculate the term insurance premium online by using the term insurance premium calculator online tool
  • What are the benefits of term life insurance?

    Ans: Here are 4 common term insurance benefits:
    • Low premium rates
    • Tax Benefits
    • Death Benefit
    • Long term coverage
  • What is term life insurance?

    Ans: Let's understand what is term life insurance here. Term insurance offers financial protection for a certain period to the policyholder, thereby, offering a lump sum payout if the policyholder unfortunately passes away during the policy term.
  • What are the key features of a best term insurance plan in India?

    Ans: Below mentioned are the key features of a best term life insurance in India:
    • Affordable premium rates
    • Long-tenure life protection
    • Easy to understand and buy
    • Riders availability
    • Whole life protection
    • Tax benefits

Premium By Age

Choose Term Insurance Plan as per you need

Plans starting from @ ₹473/Month*
Term Insurance
4 Crore Term Insurance
Term Insurance
6 Crore Term Insurance
Term Insurance
7 Crore Term Insurance
Term Insurance
7.5 Crore Term Insurance
Term Insurance
8 Crore Term Insurance
Term Insurance
9 Crore Term Insurance
Term Insurance
15 Crore Term Insurance
Term Insurance
20 Crore Term Insurance
Term Insurance
25 Crore Term Insurance
Term Insurance
30 Crore Term Insurance
Term Insurance
15 Lakh Term Insurance
Term Insurance
60 Lakh Term Insurance

Life Insurance Articles

  • Recent Article
  • Popular Articles
24 Apr 2024

Most Common Life Insurance Frauds in India

Life insurance fraud is a financial crime that can be committed

Read more
09 Aug 2023

What High Net Worth Individuals (HNIs) Do To...

High net worth individuals often opt for life insurance plans to

Read more
28 Jun 2023

A Review Of ICICI Prudential Life Insurance

“Policy Bazaar insurance clarified the term policy for me, so

Read more
27 Jun 2023

A Review Of HDFC Life Insurance

“I recently bought an HDFC term plan and it is the best

Read more
20 Jun 2023

Best Life Insurance Policy in India with High...

The best life insurance policy in India is a type of life

Read more

Life Insurance for Parents in India

With the increase in the average life expectancy rate, the older population in India is on the rise. Most of the

Read more

Life Insurance for NRI

Going beyond geographical boundaries to study or pursue a career abroad is a common aspiration for many

Read more

Life Insurance Quotes

Life insurance quotes are the approximate premium rates for the specific life insurance policy. It helps you

Read more

Canara Guaranteed Fortune Plan

Canara HSBC life insurance company introduces a guaranteed fortune plan that provides assured benefits to life

Read more

Life Insurance For Women

Consistently, the role of woman in the family and the business world has changed a considerable amount

Read more
Need Help? Request Callback
View Plans
Download the Policybazaar app
to manage all your insurance needs.