Deciding how to invest your money can be a daunting decision. Two common investment options are Life Insurance Corporation (LIC) and fixed deposits (FDs). Both offer different benefits and come with some risks, so it’s important to understand the differences between the two before making a commitment. Let’s look at why an investor might choose one over the other.
What is LIC?
Life Insurance Corporation of India (LIC) is one of India’s largest life insurance companies owned by the Government of India. It offers many types of insurance plans for both individuals and groups such as whole life, endowment, money back, term assurance, pension plans, annuities, and health insurance. With LIC's policies, you have the option to avail loan facilities against your policy or receive tax deductions on your premiums paid.
What is FD?
A fixed deposit (FD) is a financial instrument offered by banks which gives investors higher returns compared to regular savings accounts. When you open a FD account with a bank or other financial institution, you agree to deposit your money for a set period of time in exchange for higher interest rates than what a regular savings account would offer. This makes FDs a great option for investors looking for low-risk investments with good returns. FDs also come with added security since they are insured up to Rs 5 lakh per depositor under the Deposit Insurance & Credit Guarantee Corporation Act 1961.
Which is Better?
Whether LIC or FD is better depends on several factors such as risk appetite, investment horizon and return expectations etc., Investors who prefer secured investments could opt for FDs as it comes with guaranteed returns that are pre-determined at the time of investing; however, investors looking for higher returns may choose LIC policies which come with greater flexibility in terms of tenure and premium payment options. Moreover, typically there are no tax deductions available on fixed deposits whereas certain life insurance policies provide tax benefits under Section 80C of the Income Tax Act 1961. Therefore it is important to evaluate all options before making an informed decision about where to invest your money.
Also, check out: best lic policy for investment
Conclusion:
In conclusion, whether an investor chooses Life Insurance Corporation or Fixed Deposit depends on their personal risk appetite and investment objectives. While fixed deposits offer secure returns with pre-determined interest rates, life insurance comes with greater flexibility in terms of tenure and premium payments along with potential tax deductions too! Ultimately it's important to understand all factors involved before selecting either option so that you can make an informed decision that best suits your needs as an investor.