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A Detailed Comparison Of Elss And Life Insurance

Published On Nov 22, 2021

An Equity Linked Savings Scheme (ELSS) is a type of mutual fund that acts as an equity vehicle for investment and growth. Unlike life insurance, an ELSS is designed to save money from the investment portfolio. Partially tax benefits on ELSS investments are available under Section 80C of the Income Tax Act, according to government regulations. Returns filed after March 31, 2018 are taxable (at a rate of 10% for amounts above Rs 1 Lac), however returns filed before March 31, 2018 are tax-free. When compared to various other options, ELSS has a statutory lock-in duration of three years and provides better returns.

A contract between an insurance policy holder and an insurance company in which the insurer agrees to pay a sum of money in exchange for a premium if the insured person dies or after a specified period of time. At ICICI Prudential Life Insurance, you pay premiums for a specific term in exchange for a Life Cover. This Life Cover safeguards the future of your loved ones by paying a lump sum in the event of a catastrophic event. In some policies, you may be awarded a Maturity Benefit at the end of the insurance period.

We compared ELSS and Life insurance plans on all applicable factors in this post.

DIfference Between Life Insurance And ELSS

Here is the key difference between both the schemes that will help you attain a better judgement.

1. Liquidity

Subject to additional policy conditions, funds may become available after a 5-year lock-in period.

After a three-year lock-in period, funds will be made available in ELSS.

2. Charges Applicable On The Scheme

There are a variety of charges, such as policy administration fees, premium allocation fees, mortality fees, and so on in Life Insurance plans.

The SID specifies exit load and fund management charges in a clear and understandable manner.

3 .Lock- In Period

With a three-year lock-in term, ELSS funds have one of the shortest lock-in durations among tax-saving options.

People sometimes get insurance plans before finishing their research only to discover later that they are unhappy with them. In such cases, some insurers offer a lock-in period, which is a defined period of time, usually 15 days, during which a policyholder can return the policy to the insurer and purchase another if they are unhappy with the first.

4. Return On Policy

You will nearly always outperform the market because these products invest mostly in equities. ELSS funds, according to market experts, can give returns that are twice as high as regular savings plans.ELSS funds invest in stocks, which exposes them to higher risk than traditional alternatives such as insurance plans.

Life insurance, on the other hand, is a low-risk investment that guarantees a predetermined amount.


ELSS funds, as discussed in the preceding article, may be an excellent option if you want to invest in equities while still receiving tax benefits. Life insurance policies, which are simple low-risk plans that give maximum security benefit to the life assured's beneficiaries in the case of the policyholder's untimely death, provide a comparable service. 

You may also like to read - Should I Choose PPF Or ELSS?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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