PPF stands for Public Provident Fund, it is basically a saving cum tax saving scheme introduced by National Savings Institute of the Ministry of Finance in 1968 for the uncateroziged sector. Any Indian who is residing in India, whether a major or minor can open a PPF account. At present, the interest rate is 8.7% Per Annum (Compound Annually).
Life Insurance (LI):
Life insurance is a contract between insured and insurer, where insured person is supposed to pay some amount to Insurer that is called premium, which is paid on regular interval or lump sum to avail the protection or risk cover (sum assured) .The sum which is assured is paid at the time of maturity or loss of life of Insured person.
Comparison between Public Provident Fund Vs Life Insurance
Public Provident Fund is to secure yourself in term of financial burden after retirement, whereas Life Insurance is to protect yourself against unfavorable condition like illness, death etc.
Public Provident Fund is for 15 years, where as you can extend it in multiple of 5 year blocks for any number of times. For life Insurance minimum duration is for 5 year and max is up to death, also it depends on policy to policy and on the terms of the insuring company.
The premium in Public Provident Fund starts from Rs 500 to Rs 1.50 lakhs,. where as in Life Insurance there is no mim and max limit.
- Tax Rebate:-
In Public Provident Fund you can have tax rebate under 80C up to 1.5 Lakhs. In Life Insurance also you can get Tax rebate under 80C up to 1.5 Lakhs.
- Returns Guarantee:-
In Public Provident Fund there is a guaranteed return, the interest rate for this financial year is 8.7% whereas in Life insurance there is no guaranteed return. It depends upon the market condition, performance of the plan & bonus declared by the insuring company.
In Public Provident Fund you can have a loan of upto 60% amount deposit in your PPF account from third to sixth year but in Life Insurance there is no loan facility.
- Locking Period:-
In Public Provident Fund the locking period is for five years. In life Insurance the locking period is three years only.
In Public Provident Fund there is no facility of surrender unless it is case of death where as in Life Insurance you can have the facility of surrender.
In Public Provident Fund initially there were account opening agents but now there is no agent you can open the account in post office or listed banks directly. For Life Insurance there are agents with whom you can take policy.
In Public Provident Fund if amount is not deposited in a year there is Rs 50 penalty where as in Life Insurance late fees is 10% of the premium.