better, LIC policy or PPF

better, LIC policy or PPF

Great question. Let me lay down the facts for both products. Post this the answer will just emerge automatically. I would touch the points of difference only since rest of the factors are similar. Here it goes:

LIC:

Compulsion to pay: Yes. Once you get locked in, most plans don’t allow you to skip any payments for the term chosen, say about 15 to 20 yrs. It almost becomes a loan installment.

Ability to withdraw in need: Poor. This implies that you can not withdraw your money once you get into the policy unless you are willing to take a substantial damage to your principal amount.

Rate of return: Ranges from 4.5% to 6% in these times based on the kind of plan. Return is tax free but so is PPF.

PPF:

Compulsion to pay: No. You can decide whether to pay further or discontinue after 5 years.

Ability to withdraw in need: Yes. After 7 years, you can withdraw up 50% of the contribution.

Rate of return: Rate of return is 8% all tax free under EEE status for all stages.

WHICH IS BETTER?

Well, you decide in light of the facts above. The answer is staring you on the face, isn’t it ?