You must consider the distinctions between purchasing a life insurance policy from the Life Insurance Corporation of India and investing in the Public Provident Fund (PPF) whether it comes to protection or saving. You may compare PPF and LIC to make an educated choice. I will tell you all that I know about LIC vs PPF.
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PPF and LIC are two unique investments that meet various demands. The two investments would differ significantly when compared. PPFs are used for savings, whilst LIC policies are used for insurance.
What is Life Insurance Policy (LIC)?
Corporation for Life Insurance A state-owned insurance and investment firm is called LIC. Following the passage of the Life Insurance of India Act, the Life Insurance Corporation of India (LIC) was founded in 1956. It provides a way for people to get insurance to safeguard their loved ones against threats. A LIC policy is a contract that requires ongoing premium payments or a one-time payment to the insurance provider. Upon the LIC policy's maturity or the unfortunate passing of the policyholder, one will receive a lump sum payment.
The people who need life insurance the most are those who have dependents who depend on their income. Consequently, the nominee will get the insured sum in the terrible event that a policyholder passes away. Therefore, LIC serves as a risk cover for the family of the policy holder. The policyholder will receive a lump sum payment if the insurance expires prior to the insured person's passing. The same might be used to the policyholder's retirement.
What is Public Provident Fund (PPF)?
The Government of India launched the Public Provident Fund programme. In 1968, the National Savings Institute introduced it. This long-term post office savings programme is backed by the government, so the returns are assured. Every three months, the Ministry of Finance releases the PPF Interest Rate. The yearly compounded PPF rate for the current quarter, January 2022 through March 2022, is 7.1%.
According to Section 80C of the Income Tax Act of 1961, investments up to Rs 1.5 lakh each fiscal year are totally tax-free in the hands of investors. Additionally, the proceeds from interest and maturities are tax-free as well. As a result, a person investing in PPF to save for retirement need not be concerned about taxes.
A comparison between LIC and PPF
| Basis of Difference | PPF | LIC Policy |
Purpose |
Savings and investment |
Insurance and risk protection |
Returns |
7.1% p.a., compounded annually |
Depends on the policy, usually 4%-6% |
Tenure |
15 years |
Flexible tenure, as chosen by the subscriber |
Premature closure |
Not allowed |
Allowed with penalties |
Regulatory authority |
Central Government |
Insurance Regulatory and Development Authority |
Deposit amount |
The minimum is INR 500 and maximum is INR 1,50,000 |
Premiums are fixed and not flexible for LIC |
Liquidity |
PPF allows partial withdrawals from 7th year and a loan facility from 3rd year |
Insurance policies have a lock-in period of 3 years, after which the policy can be encashed |
Taxation |
PPP falls under the EEE category. Hence the investment, interest, and redemption corpus are completely tax free. |
The premium paid is tax free if it is less than 10% of the sum assured. The death benefit is also tax free. |
I believe I was able to explain about LIC vs PPF clearly.
Read More: Which Bank is Best for PPF Account Opening? What are the LIC loan interest rates? Which is Better NSC or PPF?Your Feedback Matters! How was this Answer?
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LIC vs PPF
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2022-12-21T19:50:30+00:00 2022-12-21T19:50:30+00:00Comment
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