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Should I Choose Life Insurance Over PPF?

Published On Nov 18, 2021 10:00 AM By InsuranceDekho

The Public Provident Fund, or PPF in short, is a government-backed investment scheme. An investor can deposit a minimum of Rs 500 and a maximum of Rs 1.5 lakhs in a PPF account in a single financial year. Section 80 C ensures that the principal, returns, and maturity amount are all tax-free if this requirement is met.

To obtain the protection or risk cover provided by life insurance, premiums must be paid on a regular basis. The sum assured under a policy is the amount of risk coverage offered by the insurance. Depending on the type of life insurance acquired, such as a plain term plan or a term plus savings plan, this sum assured is paid in the case of death or maturity. Section 80C of the Internal Revenue Code allows you to deduct the cost of a life insurance policy.

Should I Choose Life Insurance Over PPF?

It is one of the most common questions which pop up in the minds of individuals exploring different investment options for planning for their retirement. Following are some of the key points, which will help you get an answer to this question - 

1. Return On Investment

The present annual compounded return on PPF is 8.7%, however the government may adjust it. The return on maturity benefit in life insurance differs from one insurer to the next, as well as one policy to the next. The return on maturity benefit is typically approximately 4% to 6%, but a "return" on death benefit cannot be predicted because it might be several times the premium paid (or invested amount) depending on the time of death from the policy's start date.

2. Flexibility

It is to be noted that a person can buy as many policies as they want, but they can only have one PPF account. 

Whereas, the premium (one-time/annual/half-yearly/quarterly/monthly) is fixed and not flexible in life insurance. The sum assured and, as a result, the premium due at the time of purchase can be customised to meet the buyer's needs and financial capabilities.

If you cease investing or paying premiums owing to some reason, both PPF and life insurance plans can be simply restarted. PPFs have a 15-year term that can be extended in 5-year increments up to a total of 25 years. You can choose the policy period in life insurance, subject to specific restrictions and quotas that differ from policy to policy. It could last until death. 

3. Investment Motives

A legal entity, a life insurance policy is a type of property. You can mortgage it, transfer it, gift it, sell it, or hypothecate it if you follow the rules. You can also borrow money from the insurance provider to pay for the policy. A PPF, on the other hand, cannot be hypothecated or used as collateral.


Life insurance and PPF are two fundamentally different products. Life insurance must always be given top attention because it protects your family in the tragic event of your death. Once your safety is ensured, you may concentrate on other aspects of your life, such as your children's schooling and marriage, as well as your retirement.

To get at a better judgement, it is necessary to evaluate the preceding essay in order to comprehend the fundamental distinctions between both approaches.

Also 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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