Fixed Deposit V/S Life Insurance---- Where Should I Invest?
Updated On Aug 07, 2021
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There are various insurance and financial products available in the industry in which you can invest and in turn obtain high returns on them. Amongst these investment products, two of the most popular ones include Life Insurance and Fixed Deposit. Let us understand these products in depth.
Meaning of Fixed Deposit and Life Insurance
Fixed deposits are a type of investment product. A customer can make investment in a fixed deposit for a specific duration according to their convenience and in turn receive good returns upon maturity from their investments. Generally, banks do not permit their customers to withdraw their deposits prior to the mentioned maturity date. However, by notifying the bank beforehand, the fixed deposits can be withdrawn. These deposits let the customers invest for a minimum duration of 7 days and maximum duration of 10 years.
While, a life insurance plan is an insurance plan that one can purchase from a specific insurance company by paying premiums i.e a particular amount of money paid by the policyholder in order to avail the benefits of an insurance plan. An assured sum is given to the nominee by the insurance provider upon the sudden demise of the policyholder.
FD V/S Life Insurance--- Which One is Best Suited for You?
In case you wish to invest and save for your future, it is suggested to consider investing in fixed deposits. Highlighted below are some of the key differences between a fixed deposit and a life insurance plan.
- A fixed is purely a product associated with investment whereas a life insurance is a product associated with insurance. Investment is which assists an individual in saving for the future while insurance is a product that you buy for protection against risk for you as well as your family.
- A fixed deposit is ideal for both short as well as medium term investment. On the other hand, a life insurance plan is meant for long term investments. In Fixed deposit, investment can be done for a duration of as low as 7 days unlike a life insurance plan.
- A customer can make an investment of minimum Rs 1000 in their FDs with the banks, while, for a life insurance, the minimum payable premium amount differs from plan to plan depending on the factors like age of insured, policy duration, gender etc.
- One invests in FD to inculcate a savings habit, while a life insurance plan is bought in order to protect one’s family members from the future uncertainties.
Thus, one should consider investing in either a fixed deposit or a life insurance plan depending upon their individual needs and budget.
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.