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There are many financial and insurance products available in the market wherein you can invest and receive higher returns on your investments. Among the products available in the market, fixed deposit (FD) and life insurance (LI) are the two most popularly used investment products. Although life insurance is an insurance product, many people use life insurance as an investment product. On the other hand, fixed deposit is a purely investment product wherein you can invest for varying tenures. However, both life insurance and fixed deposits serve your different needs.
Fixed deposits are investment products. You can invest in fixed deposits for fixed tenures as per your convenience and get attractive returns on your investments at maturity. Normally, banks do not allow you to withdraw your deposits before a given maturity date. But, with prior notification to bank, you can withdraw your fixed deposits. These deposits allow you to invest for a minimum period of 7 days to a maximum period of 10 years.
On the other hand, life insurance is an insurance product which you buy from a particular insurance provider/company by paying a specific amount of money as premiums. A life insurance policy provides an assured amount of sum to a nominated individual upon the death of the insured person. Life insurance policies are normally divided into two types – whole life insurance and term life insurance policies. You can buy these policies for different tenures based on your requirements. Not only these policies provide risk coverage, you can also use these policies to pay off your medical bills, fund children’s education and plan for your retirement.
Fixed deposits are savings products offered by banks and you can enjoy a wide range of benefits by investing in them. Mentioned below are some of the major benefits you can enjoy by investing in fixed deposits:
Like fixed deposits, life insurance has its own set of benefits. It comes with the following benefits:
Fixed deposit is always a better option to invest as it is purely designed for your investment and savings related needs. If your intention is to save and invest for the future, it is advisable you invest in fixed deposits. Listed below are some of the major differences between fixed deposits and life insurance.
Even if you don’t get any tax benefit for investing in fixed deposits, it is an ideal product to invest in if you want to get fixed returns on your investments. So, if you want to earn on a regular basis, a fixed deposit account can be the perfect choice. Invest in fixed deposits and get income in the form of interest. Fixed deposit is the most preferred choice of investment among senior citizens.
No, fixed deposit account does not provide risk coverage. But, you can get assured returns on your investments with your FD account.
You can invest in a fixed deposit account for a minimum tenure of 7 days.
Yes, you can withdraw your fixed deposits to meet your emergency expenses by giving prior notification to your bank.
Yes, you can get tax benefits under section 80C and 80D of the Indian Income Tax Act, 1961 by purchasing life insurance policies.
Fixed deposit is an investment product meant for savings while life insurance is an insurance product primarily designed for risk coverage and savings.
Yes, you can take loan against your FD.