Life Insurance | Mutual Fund | |
Objective | Investment along with life insurance coverage | Purely investment based, that helps in wealth creation. |
Age | 26 | 26 |
Policy Term | 35 | 35 |
Premium Paying Term | 10 | 10 |
Annual Premium | 200000 + GST | 200000 |
Death Benefit | 2580000 | 5000000 |
Survival Benefit | 196520 for 24 years from 12th year | 196520 for 24 years from 12th year |
Maturity Benefit | ₹ 21,96,520 | ₹ 4,21,37,586 |
Returns | 6.224% | 12% |
Risk | Guaranteed Return Product, Safe Investment | Equity mutual funds are subject to market risks, the risk can be reduced with longer holding period. |
Liquidity | Highly illiquid, the surrender option & loan option is available but client has to suffer a heavy financial loss on executing these options as surrender charges are very high. | 3-year lock-in period for ELSS Mutual funds. No lock-in period for regular MF. One can redeem the entire fund or part of fund whenever required without any charges. |
Investment Flexibility | Life Insurance is a long-term contract, if the premiums are not paid as per the premium paying term, client has to bear a huge financial loss | Client can stop contributing to the fund any time as per his or her wish. No penalty or no impact on returns even after discontinuing the SIP in-between. |
Charges | Client has to bear GST over and above premium amount as Life Insurance is considered as service and not investment. | GST is not applicable. |
Tax Benefit | Premium paid are tax-exempted annually up to Rs. 1,50,000 under Section 80C of the Income Tax Act, 1961. Additionally, the maturity amount is tax-free under sec 10(10D). | Annual contribution in ELSS Mutual funds are exempted from tax up to Rs. 1,50,000 under Section 80C of the Income Tax Act, 1961. Long Term Capital Gain Tax @ 10% is applied on Maturity. |
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