NPS vs LIC: Which is Better for Your Current Salary Structure?

To secure a stable financial future, consider NPS or LIC. Understand both schemes before deciding which one is better for you. Here’s a quick guide.

What is NPS?

• NPS is a government-regulated retirement income program
• Investors can allocate their investments among government funds, corporate bonds, fixed deposits, and equities
• The program offers two account types: Tier 1 (with withdrawal limitations) and Tier 2 (without limitations)
• Each account type has unique features

What is LIC?

• LIC is a well-known insurer that offers life insurance options
• The typical endowment policy combines savings with insurance protection
• Unit Linked Insurance Plans (ULIPs) provide both life insurance and investment opportunities by investing a portion of the premium in equities or debt funds

NPS or LIC which is better?

The decision between NPS vs LIC in terms of financial planning might be difficult. Both have special benefits that meet certain demands. Let's look at the elements that can help you make a decision -

Conclusion

Choose NPS or LIC based on your financial goals, risk tolerance, and salary structure. NPS is better for a balanced investment with higher returns, while LIC's endowment plans or ULIPs are ideal for combining investment and insurance.

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Frequently Asked Questions

1. Is NPS better than LIC?

NPS and LIC serve different purposes. LIC provides life insurance with assured returns, while NPS focuses on flexible investments for retirement planning. When deciding between NPS and LIC, consider your objectives.

2. What is the lock-in period for NPS?

NPS has a 60-year lock-in duration. After the third year has passed, some conditions permit partial withdrawals.

3. Is NPS a good or bad investment?

Because of the tax advantages, flexibility, and possibility for higher returns, NPS can be an excellent retirement investment. However, it depends on your risk tolerance and financial objectives.

4. What are the disadvantages of NPS?

The NPS offers few investment possibilities, market-related risks, and withdrawal limitations before retirement. It might not be suitable for people looking for rapid money or returns that are certain.