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LIC vs Mutual Funds- Understanding the Difference

There are numerous options given to an individual when it comes to investing. But choosing the best is an extremely confusing task. However, where a person wants to invest is a matter of personal choice and depends upon the goals of the investor, the amount of money he wishes to invest and the risks he might want to take.

LIC and Mutual funds are the most popular and trusted methods of investment in India and people often find it difficult to choose between the two. So here’s a detailed study regarding LIC VS Mutual Funds to help you choose the best for yourself.

LIC VS Mutual Funds





LIC offers life insurance which is a protection scheme that helps you to secure your family’s future in your absence.



 A Mutual fund is an investment scheme that helps in increasing your wealth through market-linked investments.



The main objective of choosing a LIC policy is to safeguard your dependent’s future. It could be anyone, the insured’s parents, spouse, or children. It is a financial asset for the insured and his family.



The main objective of investing in mutual funds is to meet your financial goals. They are highly rewarding and help you to fulfill long-term goals like paying for your education, purchasing a property, starting your own business, etc.



Life insurance provides death benefits, which means a secured future for the insured’s family.



Mutual funds do not offer any coverage in case of mishaps. However, it is the best way to manage your funds.

Risk Involved


There is very little or no risk involved in a LIC policy as the sum insured is paid to the insured at the time of maturity even if the insured is alive.

Risk Involved


Mutual funds are a matter of high risk as their prices keep fluctuating but at the same time, they are very rewarding.



Life insurance is a good choice for safeguarding one’s family’s future. However, the returns offered by the policy are comparatively low.



Mutual funds offering the option to diversify your funds, help you to maximize your returns without being dependent on a single source. Thus they are an excellent choice to make investments and offer high returns in the long term.

To choose the best way to invest your money from amongst the two or any other financial products, you must first decide your goal. It is imperative to get a detailed understanding of what each of them has to offer in terms of return, risk, and security.

You also need to understand the benefits the product would offer in your desired time period. All of this together will help you make well-informed decisions.

Be very careful while investing as it is your hard-earned money that you’re risking. Note down your requirements after comparing the different financial products, and then wisely choose the one that matches your goals, requirements, and expectations.

Great returns and fulfillment of your financial goals- enjoy the best of both worlds by making a smart choice!

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