Is ULIP Better Than PPF?
Updated On Aug 21, 2021
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Are you looking forward to making a worthwhile investment? Have you been confused between ULIP and PPF? If so, know that both the investment options are beneficial in their own way. However, to make the better choice out of the two, it is important to understand the differences between the both in the first place.
What is ULIP?
A ULIP or Unit Linked Insurance Policy is a scheme that offers investment as well as life insurance. When a policyholder invests in a ULIP, a part of its premium is used to provide life cover. The remaining amount is invested in money making funds such as equity, debt or hybrid as chosen by the policyholder. The lock-in period for ULIPs is limited to 5 years. Moreover, what’s best is that ULIPs also offer tax savings benefits.
What is a Public Provident Fund?
Launched in 1968, PPF is a savings scheme introduced by the government of India. PPF is considered one of the most preferred and stable saving instruments. PPF can be opened at all public and private sector banks. PPF can be opened online and linked directly to your salary account. The investment tenure is 15 years. However, it can be extended for 5 more years. The minimum one can invest is Rs. 500 or more. Only up to Rs. 1.5 Lakh can be invested.
Also read - Difference Between Ulip And Mutual Funds
Differences Between ULIP and PPF
Below mentioned are the differences between ULIP and PPF:
|
Criteria |
ULIP |
PPF |
|
Type |
Investment + Insurance |
Investment |
|
Lock-in Period |
5 years |
15 years |
|
Liquidity/Withdrawal |
Partial; after 5 years |
Partial; after 7th year |
|
Returns |
Market linked; depend on investment fund & style |
Fixed returns; decided by the government |
|
Tax Benefits |
As per Sec 80C |
As per Sec 80C |
ULIP or PPF - Which is Better?
Now that you are aware of the differences between ULIP and PPF, make sure you choose the best possible investment option for yourself. As far as the better one between the two is concerned, know that it is something that totally would depend on your basic requirements and expectations.
If you are interested in securing yourself with investment as well as insurance, go for ULIP without giving it a second thought. If you want just the investment, go for PPF. Similarly, if you are willing to take a risk and gain returns based on the market conditions, choose ULIP. However, if you want fixed returns and do not want to end up being dependent on market conditions, choose PPF right away! In both the cases, you will get to reap tax benefits under Section 80C of the Income Tax Act, 1961.
At Last
No matter which one you choose between ULIP and PPF, make sure you read the policy documents carefully to make an informed selection. If still in confusion, feel free to get in touch with one of our InsuranceDekho experts and get all your doubts clarified right away!
You may also like to read - Which is better ULIP or term insurance?
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.
