When it comes to the investment we often tend to consult, compare, almost everything and every scheme. This is essential because if the investment is not made properly then the money invested cannot get it best ROI (Return on Investment). For any individual who wants his hard earned money to become a valuable asset to him. Everyone do savings and also companies tend to provide a government-backed scheme that gives the employees of the company a chance to invest for their retirement. These both are often compared with one another because it is often looked as same but that not the case. PPF and Life Insurance is very different from one another below I have mentioned little way which can be used to compare both the plans to gain the best plan for your need.
Public Provident Fund
Public Provident Fund is an investment tool that utilizes a partial cut from the salary of the employee. This small salary cut gets added in the PPF Account and at the end of the year, the interest rate is calculated. Current interest rate of the PPF is 8.55% per annum.
Life Insurance
Life insurance is another investment cum protection plan that can be used as a financial tool to make a profit in long term. Depending on the type of policy you opt for you can get a plain term policy of term plus savings policy as the savings investment. The sum assured is the amount that the institution is payable to the policyholder. The sum assured is paid on the death of the policyholder or reaching the maturity period depends on the policy chosen. This provides a surety of the finance at the time of the death of the policyholder to the nominee of the policyholder.
The comparison
Let us now compare both of these financial tools for knowing the value each of these tools passes to the policyholder.
| Criteria | Public Provident Fund | Life Insurance |
|---|---|---|
| Organization: | Employees’ Provident Fund Organization | Insurance Regulatory & Development Authority |
| Tax benefit | Yes | Yes |
| Yield | 8.7% p.a. (subject to change) | Depends on the insurer |
| Flexibility | Very flexible | A fixed premium is there |
| Liquidity | Amount can be withdrawn from 7th-year | Amount can be withdrawn from 3rd year |
| Loan availability | Loan can be availed after 6th year. | Most of the insurance plan offers loan facility. |
| Benefits | Retirement benefit on maturity | Maturity benefit as well as a death benefit |
What to choose? – PPF vs Life Insurance
Both the financial tools are great when it comes to investing our money but protection is important than the savings as on the scenario of death of the earning member of the family the loss is huge and cannot be shoved but on the financial front this is not the case as the Life Insurance covers the need of the family by providing a lump sum amount of the sum assured with additional benefit and bonus by which a family at the time of the need fulfill their requirement.
PPF, on the other hand, does not take death into consideration and only provide the interest earned up to that stage. The PPF is more oriented towards as a saving account for the retired person, in short, we can consider it as a pension program by the government.
Conclusion
In the end, we should also consider the fact that the provident fund is a still very attractive plan to make use of some additional money or some bonuses you get. PPF and Life Insurance are both important in their own places. These both are necessary to sustain the life harmoniously so it is in the best of the interest that one should opt for both and make a healthy use of his hard earned money. for example- A person opting for a pure term plan for Life Insurance for life protection and PPF for savings is a very good option. Calculate interest in PPF to see the actual difference.
Why Pure Term Insurance with PPF?
Pure Term Insurance like LIC E-term Insurance offers the best life protection as it ensures 10 times the life protection in 1/10 of the premiums but does not offer any maturity benefit. Hence in this plan, there are no savings this can be resolved by opting for PPF as this provides a higher interest rate than Life Insurance and is a better savings plan.
