What is the Difference Between ULIP and PPF?

What Is ULIP?

What Is PPF?

What Are the Key Differences between ULIP and PPF?

The main differences between PPF and ULIP are as follows:

Criteria

Unit Linked Insurance Plan (ULIP)

Public Provident Fund (PPF)

Amount of Investment

You can invest any amount, depending on your financial goals.

The minimum amount that you have to invest is ₹500, and the maximum amount is ₹1.5 Lakhs for a financial year.

Purpose of Investment

Its main purpose is wealth creation and financial protection.

Its main purpose is to serve as a passive income after retirement.

Lock in Period

The minimum lock-in period is 5 years

The minimum lock-in period is 15 years.

Partial Withdrawal Eligibility

Allowed after 5 years from the start date of investment

Allowed from the 7th year of investment.

Charges Associated

Multiple additional charges are associated.

You will have to pay a one-time fee of ₹100 to open an account.

Withdrawals

You can withdraw money without additional charges after the lock-in period.

Partial withdrawal is available from 7th year, and complete withdrawal only after 15 years.

Tax Benefits

Available under Sections 80C and 10D of the Income Tax Act.

Available under Sections 80C of the Income Tax Act.

Investment Risk

It depends on the type of fund in which you choose to invest.

Not much risk is involved as it is a government bank.

Apart from this comparison between ULIP and PPF, you must know some indispensable pointers to consider before finalising your decision.

Which is a Better Investment Option ULIP or PPF?

FAQs About PPF and ULIP

What is the current interest rate of PPF? up-arrow

The interest rate of PPF is 7.1% for the financial year 2022-2023.

How to calculate PPF interest? up-arrow

You can calculate the PPF interest using online calculators. These are easy to use and provide accurate results.

Can I surrender a ULIP before the end of its duration? up-arrow

Yes, you can surrender a ULIP any time before the end of the duration of your policy to meet your urgent need for funds.

Are the returns guaranteed on ULIP? up-arrow

No, the returns are not guaranteed as they are dependent on market fluctuations and vary accordingly. However, there are chances of receiving sumptuous returns on parking your money in the right funds.

Is ULIP a good option for long-term investment? up-arrow

Many investors consider ULIP as a lucrative long-term investment option due to the countless benefits like tax benefits, increased returns, investment flexibility, life cover, and switching between funds.