LIC vs Mutual Funds – Best Tax Saving Option

The Tax Saving Session is on the way as March Ending is near. People who run for tax saving options at last time, most of them end up with bad or less effective/ Less Return tax saving options. We have already listed out the Best Tax Saving Options via Section 80C IT Act. Out of those, LIC and ELSS Mutual funds are the top most tax saving options adopted by people.

LIC vs Mutual Funds – Best Tax Saving Option

So, here we are describing the best tax saving options among LIC and Mutual Funds. No doubt LIC is most popular and most choose insurance scheme in india but nowadays Mutual funds are also going up day by day.

Why to choose LIC?


LIC needs no introduction has we all know it is best insurance company in india, also gives fastest claim returns benefit. All the LIC policy will give you tax benefit under Income Tax Act 80C where you can claim tax free premium amount. LIC has lots of policy which have multiple benefits apart from risk cover.

Benefits of Investing in LIC is Risk Cover, Loan facility, Tax Saving Benefit. These are such benefits that we all know. But apart from this benefits, you get very low return of investment if you are buying any term insurance where you will get money back guarantee too.

For Example, lets take the latest newly lunched LIC policy. LIC has started to hit on target as soon as tax saving month (March) is near. In last one month, LIC has lunched 3 policy,LIC Jeevan Pragati,LIC Jeevan Shikhar and LIC Jeevan Labh.

If you read the detail review of all these 3 policy, you will find that LIC Jeevan Pragati gives nearly 7% of annual return on 21 years of plan, LIC Jeevan Shikhar gives 6% of annual return and and almost same goes with LIC Jeevan Labh.

So, if you buy these newly lunched schemes, you will get hardly 7% of annual return which is even less than interest rate of Bank Fixed Deposit.Also, you can take loan again bank FDs too. Risk cover is good thing for which we should always go with insurance but tax saving does not work well with LIC Insurance policies.

ELSS Mutual Funds

The Another option for Tax saving with wealth gain is ELSS Mutual fund which we found one of the best option for gain with saving. Yes. with ELSS Mutual fund you can save tax under Income Tax act 80C and also get good return.

Since Mutual funds are subject to market risk, the return is not specified or exact but you can expect atlest 10-12% return on minimum 3 years of lock in period schemes.Below is top 3 ELSS Mutual Fund Schemes which are performing very good.

ELSS Mutual Funds

So, as you can see above, the top most performing ELSS Mutual funds are giving minimum of 33% return in 3 years while LIC gives 7% return in 21 years. You can not take loan neither you can cover risk but if you want to save tax and create wealth, go for ELSS Mutual funds. You can choose other category of Mutual funds here.

Note :- ELSS Mutual funds comes with compulsory lock in period of 3 year. Also, Gains and Dividends are also tax free under ELSS Mutual funds.

Invest wisely, think before you invest and get more benefit of your money. because Money is earned very hard.

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