Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term

Protect Your family’s financial future with Kotak e-Term. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Kotak Lifetime Income Plan

Retirement years are the golden years of life. Know more


Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

Life Insurance vs Mutual Funds

Life Insurance secures your family’s future financial stability in your absence. Mutual Funds is an investment tool that enhances your wealth through market-linked investments.

  • Nov 23, 2021

Modern living is based on the desire to meticulously plan out all important decisions of your lives - everything ranging from educational institutions to your dream job and the sort of life you picture with your partner and children. You can say that financial planning is at the heart of this roadmap for your future. People are increasingly putting their hard-earned money into the many financial assets available nowadays, and you must also follow suit.

The debate over mutual funds vs life insurance has gotten a lot of attention recently. This debate is reaching the masses since everyone wants to hand-pick the greatest possible instrument to multiply their fortune, making it one of the most difficult decisions for most people. The confusion is more because life insurance and mutual funds have earned people’s confidence and enormous popularity over time.

Whether it’s about life insurance needs or the fundamental nature of mutual funds, each instrument is unique in its manner, so it’s always better to choose an option that best matches your investment model. Moreover, the reasons why one opts for any financial plan may vary from person to person depending on their financial goals. So it is advisable to first set your goals and objectives and then choose a plan that best aligns with them.

Life Insurance

An insurance policy assures that your nominees are thoroughly secured in the event of unexpected situations in your life. Once you buy a life insurance policy, the insurance companies are bound to pay your listed nominee the full sum assured if you pass away during the tenure.

When deciding which one is better, life insurance or mutual funds, it’s always best to consider the benefits and drawbacks of each financial instrument separately and understand which plan helps you fulfil your ultimate goals. The advantage of an insurance policy that makes it an effective financial tool is tax exemption on premium payments and growing dividends. The sum assured the beneficiaries receive from the insurance companies is also tax-free. Thus, in the case of mutual funds vs life insurance, an insurance plan comes with much lower risks. You can’t let the life insurance needs overpower the disadvantages if you want to make an informed judgement. For example, life insurance plans offer lower investment returns than mutual funds and are linked with increased costs due to continuous premium payments, rider additions, and other factors.

Difference between life insurance and mutual fund investment

Mutual Funds

A mutual fund is a type of venture that helps you grow your money by making market-linked investment plans. They are seen as a worthwhile investment for achieving long-term financial objectives, such as schooling, home-ownership, or a business start-up.

When it comes to the benefits, mutual funds provide much higher investment income. Moreover, unlike having to rely on a single medium for capital accumulation, their returns frequently come in stock, cash, or capital asset value appreciation. However, one drawback is that there are multiple fees and taxes hidden on the surface that reduce the profits of your mutual funds, such as the previously enacted long-term capital gains tax on equity and the implementation of service tax, that have made mutual funds extra costly. These elements combine to make mutual funds more vulnerable to risk in contrast to the insurance policy.

The Difference

Point of Difference

Life Insurance

Mutual Funds


A protection scheme that secures the future financial stability of your family in your absence

An investment tool that enhances your wealth through market-linked investments


A requisite part of your financial portfolio that safeguards the financial future of your dependents, your parents or children

A rewarding investment that helps you meet your long-term financial goals like education, buying a property, starting a business, etc.


Involves low risk as compared to mutual funds, and it offers a guaranteed death benefit

Involves high risk as it does not guarantee returns and comes with no death benefit


Low returns because of zero guarantee of returns

High returns due to diversification of funds

Having read this article, you can now analyse all the criteria that will help you decide which one is better life insurance or mutual funds. Whatever financial goals you may have in mind, the debate over mutual funds vs life insurance is here to stay. Therefore, it falls upon you to conduct thorough research, determine your needs and requirement, and make the right decision.

Kotak e-Term

Download Brochure


  • Life Cover till 85 years for Life & Life Secure Option
  • 3 Payout Options
  • Special Rates for Women
  • Option to exit the policy with premium refund at the age of 60*
  • Special Rates for Non-Tobacco Users
  • Free Medical Check Up every 5th year**

Ref. No. KLI/22-23/E-BB/2435


- A Consumer Education Initiative series by Kotak Life

Similar Articles

Is it Worth Buying Disability Rider on Term Insurance?

How to Choose Life Insurance for All Ages?

Can a Term Plan be the Substitute for a Retirement Plan?

Benefits of Buying Term Insurance Plan for Senior Citizens in India

What is Human Life value and a Human Life Value Calculator?

Life Insurance for Millennials

How to Choose the Right Life Insurance Policy for Your Age?

Digital Life Certificate for Pensioners Seeking Pension

Different Types Of Life Insurance In India

Why Term Insurance for Women is Important?

Different Types of Insurance Policies in India

What is the Difference Between Limited and Regular Pay Insurance Plan?

Is it Possible to Make Changes in a Term Plan’s Specification Post Purchase?

8 Things to Consider Before You Buy Life Insurance

What Is Surrender Value (Cash Surrender Value) in Insurance and how is it calculated?

Is Life Insurance For Millennials Really Needed?

Sabse Pehle Life Insurance

Insurance Changes You Need to Make Post Marriage

What Is Insurance Rider and It’s Benefits?

How to Select a Perfect Life Insurance Policy in India to Protect Your Future?

Term Insurance Vs Life insurance: Small Details, Big Differences

Life Insurance and Retirement Planning

5 Things to Keep in Mind While Buying Life Insurance Policy

Is Life Insurance an Investment?

5 Reasons Why a Women Should Buy a Life Insurance

Do Your Financial Planning with Life Insurance!

Take 100% Responsibility of Your Family with Term Life Insurance

जीवन बीमा पर ऋण

Adding A Child to Your Life Insurance Policy?

Why Life Insurance Is Always a Smart Decision

5 Ways to ensure faster settlement of claims

Reasons Why Term Insurance Claims Get Rejected

वरिष्ठ नागरिकों के लिए ऑनलाइन टर्म इंश्योरेंस प्लान खरीदने के लिए गाइड

What is the Difference Between Insurance and Reinsurance?

Life Insurance Plans for Women

Why Your Family Should Know About Your Life Insurance Policy?

How Do Term Insurance Plans Differ for Smokers?

Customer Awareness on Information Security

Does Life Insurance Cover Terminal Illness?

FAQs on Life Insurance

5 Easy Steps to Buying A Policy

Comparing low premium term insurance Is Not the Only Factor While Buying Life Insurance

5 Common Life Insurance FAQs and Answers

What is Insurance Coverage? Overview, Types, and Examples

What is Group Insurance?

5 Reasons Why You Need Life Insurance in College

What Happens If I Stop Paying My Life Insurance Premium?

What is Underinsurance & The Dangers of Being Underinsured

Why Online Term Insurance Plans Cheap?

What is Minimum Life Insurance Policy?

Life Insurance and Millennials

What are robo-advisors in insurance?

What Should One Consider Buying: Term Insurance or Traditional Life Insurance

Life Insurance Policy Closure

Staying Insured While Investing

Kotak Life Claim Settlement Ratio

बीमा क्षेत्र में IRDAI की भूमिका

Top 5 Common Life Insurance Myths and Facts

Life Insurance for Overweight Applicants

5 Benefits of Gifting Life Insurance Cover to Your Spouse

Savings cum Protection Plans Secures Your Family from Unforeseen Events

Is It Advisable To Have Multiple Life Insurance Policies?

Types of Life Insurance Policies in India

How do life insurance payouts work?

All You Need to Know About KYC

What is Sum Assured in Endowment Policy?

Life Insurance Nominees: 5 Must-Know Facts for Beneficiaries

What Is the Procedure to choose a nomination in life insurance policy?

7 Superficial Reasons People Avoid Buying Insurance Online

What Is Investment Insurance?

What Is Social Impact Investing and How Does It Benefit Society?

Life Insurance Beneficiary

Why Do Life Insurance Agents Avoid Selling Term Plans?

Types of Insurance You Must Invest in for Secure Future

Types of Life Insurance Or One Investment, Many Options

What Is Staggered Payment Option Under Term Insurance Policy?

Life Insurance Vs. Mutual Funds Investment

Do Life Insurance Premiums Increase Every Year?

How Much Life Insurance Cover Do I Need?

Does Life Insurance Pay for Suicidal Death?

Compare Different Life Insurance Products Offered By Kotak Life

Insurance Vs Investment - A Guide to Your Financial Goals

Difference Between Money Back and Endowment Policy

Health Insurance VS Life Insurance

Important Life Insurance Terms You Must Know

Life Insurance with Money Back vs Without Money Back

Is It Time to Review Life Insurance Policy of Yours?

When are Millennials required to take out a life insurance policy?

Does Family History Affects your Term Life Insurance Rates?

Health Insurance VS Life Insurance

How to Buy a Life Insurance Plan?

How to Use Different Types of Life Insurance for Retirement Planning?

What Is The Life Insurance Penetration In India And How Does It Compare Globally?

Role of Life Insurance in Your Financial Portfolio

Is it Possible to Reduce Life Insurance Premium without Affecting Sum Assured?

क्रिटिकल इलनेस राइडर के साथ टर्म इंश्योरेंस के लाभ

How to Customize Your Life Insurance Policy with Riders

Best Insurance Plans in India

Nominee in insurance - A Complete Guide on nomination in insurance

Term Insurance for Home Loan: How Term Plan Helps in Paying Off Home Loan?

What Should One Expect During the Medical Evaluation for Life Insurance?

Can You Transfer Life Insurance Policies to Another Company in India?

Think About Life Insurance Sooner than Later

In India, should NRIs purchase life insurance?

Choose the Nominee of a Term Life Insurance Plan Wisely

All about IRDAI

Why Buying a Term Insurance is Important for all Parents

5 Advantages of Life Insurance Going Digital

Are Deaths Due To Coronavirus Covered by Kotak E-Term Plan?

“Life” Insurance or “Death” Insurance?

What is the Current Trend in Term Insurance?

How to Calculate Human Life Value(HLV)?

Importance of Checking Claim Settlement Ratio before Buying Life Insurance

Most Common Life Insurance Riders to Enhance Your Existing Policy

Life Insurance for Overweight Applicants

Should You Buy Life Insurance After Getting Married?

What is a Single Premium Term Plan and its Tax Benefit?

9 Most Important Things You Must Learn About Paying Life Insurance Premium

Different Kind of Deaths that are Not Covered in a Term Insurance Plan

6 Things You May Not Know about Life Insurance

All About Backdating in Life Insurance

Can NRI Buy Life Insurance in India?

Why You Should Never Cancel Life Insurance Policy

Does Life Insurance Policy Cover Covid Death?

How to Choose a Life Insurance Policy

Term Plan with Return of Premium (TROP)

Important Factors to Consider While Choosing the Right Term Period for Your Term Insurance Plan

A Term Insurance Guide for Disabled People

Biggest Life Insurance Myths

What Is a Whole Life Insurance Plan?

Is Voluntary Life Insurance the Same as Basic Life Insurance?

1 CR Term Insurance Plan: How to Pick the Best 1 CR Term Plan

Why is Medical Test Important While Buying a Term Insurance?

Process of Filing A Claim For Life Insurance

What are the Benefits of Endowment Policy?

Why One Must Buy Term Insurance before 25 Years

All about Life Insurance Calculators

Details Required To Be Filled In A Life Insurance Form

How Does Life Insurance Work?

Term Life Insurance vs Accidental Death Insurance

Guide for Buying Online Term Insurance Plans for Senior Citizens

How to Revive the Lapsed Life Insurance Policy?

How to Buy a Term Life Insurance Online

How Much Life Insurance Costs and How Much Insurance Cover You Need?

Benefits of Term Insurance with Critical Illness Rider

NRI Premium Payment Options

Choosing a Life Insurance Beneficiary

Voluntary Life Insurance Policy Vs Group Life Insurance

Can You Apply For A Life Insurance After Getting Heart Attack? Here is Everything You Need To Know

What happens to joint life insurance after divorce?

Who Is A Nominee In A Life Insurance Plan?

क्या जीवन बीमा एक निवेश है?

First Job? Here’s Some Tips on How to Manage Finances

Why Should You Buy Term Insurance under the MWP Act (Married Women’s Property Act)?

All You Need to Know About Life Insurance - Its Benefits, Features, and Types of Life Insurance

How To Choose The Right Life Insurance

Why do most Indians choose the wrong way to buy life insurance?

What is Life Insurance?

Loan Against Life Insurance Policy

How to Make Death Claims on Life Insurance?

Key Things to Review in Your Life Insurance Policy Document

Role of IRDAI in the Insurance Sector

भारत में जीवन बीमा पॉलिसियों के प्रकार

How Many Insurances Should I Have?

6 Different Types of Insurance Policies

Choosing Between Short-Term & Long-Term Insurance Plans

Terms and Conditions of Term Insurance Plans

Important Terminologies of Life Insurance

Guidelines for Linking Aadhar and PAN to Insurance Policies

Difference Between Insurance and Assurance?

All About Life Insurance and How It Works?

भारत में सर्वश्रेष्ठ टर्म प्लान कैसे चुनें?

जीवन बीमा क्या है?

Important Features of a Term Insurance Plan

Always keep your Nominee informed

How Often You Must Review Your Life Insurance Policy?

Various Term Insurance Premium Payment Options Available in India

How to Find the Best Term Insurance Plan in Seven Steps

How Much Life Insurance Do You Need?

Why Renewal of Term Insurance Plan is Important

All about Your Rights and Duties While Buying Life Insurance Policy

Term Insurance Tips for NRIs in India

Why do I Need Life Insurance?

Beware of Phishing & Fraud Insurance Calls