Simplifying Life Insurance in India
ELSS vs ULIP vs PPF: Which Is the Best Investment Option?
source: financialexpress
There are numerous investment opportunities available in the market for people looking to create a corpus for their retirement savings. Many of these options help investors in saving taxes alongside helping them with wealth accumulation.
Some of the most popular options include ELSS, ULIP and PPF. However, before you invest your money, know the differences between ELSS, ULIP and PPF and which is the better investment option.
What Is an ELSS?
What Is a ULIP?
What Is a PPF?
What Are the Differences Between ULIP, ELSS and PPF?
Below is a table illustrating the difference between three of India's most popular tax-saving investment options:
| Parameters | ULIP | ELSS | PPF |
| Minimum lock-in period | 5 years | 3 years | 15 years |
| Minimum investment amount | ₹1,500 per month | ₹500 (via SIPs) | ₹500 |
| Rate of returns | Dynamic. It depends on the percentage of equities, debt and balanced funds included in ULIP policy. However, on average, it tends to be 16%. | Dynamic, but on average, it tends to be 12% to 14%. | It can be changed in any quarter as per the Union Government’s decision. The current rate is 7.10%. |
| Risks involved | It depends on the funds in which one invests money. For example, if the investor chooses to invest in equity funds, there will be more risks than in debt funds. | ELSS are equity funds. Hence they are subjected to market-related risks. | It is a government-backed investment tool, so there are no risks involved. |
| Purpose of the plan | It will provide life insurance coverage and help you accumulate wealth over time. | ELSS will allow investors to create wealth and, at the same time, save on paying taxes. | It will help you save money and create wealth for retirement. |
| Charges | Administration charges, fund management charges, mortality charges, premium allocation charges etc. | Schemes expenses and exit load in some cases. | The banks or post office will charge you a one-time fee of ₹100 for opening the PPF account for you. |
Now that you know the significant differences between ELSS, ULIP and PPF, you can make an informed choice when investing. As an investor, you need to weigh all the factors mentioned above. Many people invest in all three options, and you can do that too. However, it would be best to consider factors like your risk appetite, investment goals, and investment horizon.
FAQs on the Difference between ELSS, ULIP and PPF
Are there any risk covers related to ULIP?
What are the withdrawal or redemption policies related to PPF?
Can you redeem your entire ELSS investment in one go?
Can I transfer my PPF account to another branch or office?
Important Guides related to Life Insurance
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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