LIC Money Back Plan Vs Mutual Fund
Updated On Sep 05, 2021
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Mutual funds are popular investment vehicles that pool participants' money and invest it in a variety of securities such as equities, bonds, and money market instruments. Mutual funds provide investors with access to professional fund management. The fund management team makes investments after doing extensive research and based on the fund's purpose.
In a LIC money-back plan, the policyholder receives a percentage of the sum insured at regular intervals during the policy term, as opposed to receiving a lump-sum payment after the term as in other plans. It's similar to an endowment plan, but with the added benefit of liquidity. They are ideal for people who want to save a lot of money while maintaining liquidity through an insurance plan. If a policyholder dies, the nominee of the insurance receives the entire sum guaranteed, and the survival benefits are not subtracted.
LIC Money Back Plan Vs Mutual Fund - Key Differences
MeaningLIC Money Back Plan is a protection plan that allows you to safeguard your family's financial future in your absence. This insurance is an important part of a person's financial portfolio since it protects the financial future of your dependents, such as parents or children whereas A mutual fund is an investment instrument that may help you increase your wealth by investing in market-linked securities.
Must read: ULIP Vs. Money Back Plans
PurposeA LIC money-back policy ensures that the insured person will get an amount every few years to cover any future big costs. whereas the major reason for investing in mutual funds is to achieve large returns for long-term financial goals.
RiskIn comparison to mutual funds, the risk of LIC money-back insurance is lower. It does, however, provide guaranteed death benefits. Mutual funds, on the other hand, are market-linked investments and hence very volatile.
GoalsA money-back guarantee generally includes the following advantages: During the term of the insurance, you will receive a regular stream of income in the form of a 'Survival Benefit.' If only in the event of an unpleasant occurrence such as the death of the lives ensured. The sum guaranteed and the bonus are paid to the policy's nominee. whereas Mutual funds are a rewarding investment that may help you reach your long-term financial objectives, whether they be for school, homeownership, or establishing a company. A mutual fund does not guarantee or give any type of death benefit. It does, however, provide a fund manager.
ReturnIf a LIC Money Bank insurance plan is utilized for investing, it is not only costly but also does not guarantee returns comparable to mutual funds. Because mutual funds provide for fund diversification, you may maximize your returns without relying on a single fund for growth.
You don't have to be perplexed if you can't decide between a LIC money-back plan and a mutual fund. While each financial instrument has different advantages, it is critical to first thoroughly grasp each product. When deciding to purchase a financial product, it is critical to understand what each one has to offer and how it will benefit you throughout the time length you require. After all, it is your hard-earned money that you would deduct from your earnings and invest in a certain plan.
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.