Fixed deposit VS life insurance - where should I invest?

Type of Fixed Deposit and Life Insurance Policy

Fixed Deposits

The different types of FDs that are offered are mentioned below:

1. Tax-saving FD
2. Non-Cumulative FD
3. Cumulative FD
4. Regular FD

Life Insurance

The different types of life insurance policies that are offered are given below:

1. Retirment plans
2. Child insurance plans
3. Group life insurance
4. Whole life insurance
5. Moneyback policy
6. Endowment plans
7. Unit Linked Insurance Plans
8. Term insurance plans

Fixed Deposit Vs Life Insurance - Which is Best for you?

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.

1. Fixed deposit is a purely investment product whereas life insurance is an insurance product. Investment is something that helps you save for the future whereas insurance is something which you purchase for risk protection and protect your family in our absence.
2. Fixed deposits are best for both short- and medium-term investments whereas life insurance plans are designed for long term investments. You can invest for a period of as low as 7 days in fixed deposits unlike a life insurance plan wherein you need to invest for at least 10 years.

1. You can invest a minimum amount of Rs. 1,000 in bank fixed deposits whereas in case of life insurance, the minimum premium is different for different plans based on the insured individual's age, gender, policy term and premium payment condition.
2. Fixed deposits offer fixed returns on investments and it is mentioned in the beginning when you open your deposit. But, investment in Unit Linked Life Insurance Plans is subject to market risk. The fund value you receive by investing in these plans are affected by the prevailing market condition.
3. Fixed deposits add to your habit of savings whereas life insurance plans are purchased out of caring and fear that your near and dear ones may face some risks in future.
4. Both fixed deposits and life insurance policies can be withdrawn. You can withdraw your fixed deposits at any time by sending a notification to your concerned bank whereas a lock in period of 3 years and 5 years is applicable to regular life insurance and ULIP plans, respectively.