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LIC vs Mutual Funds – Key Differences Between LIC and Mutual Funds

 





ParameterLife InsuranceMutual Fund
MeaningLife insurance provides protection to a family against unforeseen events like death.A mutual fund is an investment option that helps in generating significant returns through investing in market-linked instruments.
PurposeThe main purpose of a life insurance policy is to safeguard the financial future of dependents.The primary motive for mutual fund investments is to generate significant returns for long term financial goals.
RiskLife insurance is less risky in comparison to mutual funds. However, it offers guaranteed death benefits.Mutual funds are market-linked investments, and hence are highly volatile.
ReturnsLIC schemes offer low returns.Mutual funds offer significant returns in the long term. Long durations help in addressing the market volatility.
Tax BenefitsPremium payments up to INR 1.5 lakhs qualify for tax exemption under Section 80C of the Income Tax Act, 1961.Only investment in ELSS mutual funds qualify for tax deduction under Section 80C of the Income Tax Act, 1961.



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