LIC VS. MUTUAL FUNDS

                                           LIC Vs. Mutual Funds

Life insurance and mutual funds are two very different products that are often compared when a person plans to invest their money. Following are some major differences between LIC and Mutual funds that will help you understand both much better.

Features	Life Insurance	Mutual Funds
Meaning	Life insurance is a pure protection plan that will secure your family financially in case of your untimely demise	Mutual Funds are a type of financial instrument created by a pool of investments from different institutions and individuals
Purpose	The main purpose of a typical life insurance policy is to safeguard the financial future of the family of the policyholder in case of his/her untimely demise	The main purpose of mutual funds is to generate returns on your investments to meet your long term financial goals
Liquidity	It takes care of the liquidity through its loan facility	Investors can liquidate their units at any given time
Risk involved	Life insurance comparatively involves less risk than other options	Since mutual funds’ investments are subject to market risks, hence the risk involved is also high
Tenure	The policy is in existence for a defined policy tenure	Mutual funds do not have any tenure. One can invest any amount at any point in time
Returns	Returns depend upon the policy type, but generally are low compared to the investments	Returns are significantly higher in long term
Rider benefit	Additional rider benefits are available under the policy	No rider benefits as such are provided under mutual funds
Diversification	There is no diversification option when you invest your money in just one plan	Mutual funds comprise many securities, hence making the portfolio of the investor diverse
Tax benefits	Tax exemption is up to a premium payment of Rs.1,50,000 under section 80c of the income tax act, 1961	ELSS mutual funds only qualify for tax exemptions under section 80c of the income tax act, 1961