What Is The Difference Between Insurance And Mutual Fund?

Insurance is concerned with protecting your life for a period of time against any mishaps, accidents or even death. By insuring your life you can provide financial security to your close ones even if something unfortunate happens to you.

Mutual fund is a something where they pool money from various individuals or corporates and invest them in diverse equities. Here the risk is less as compared to direct trading in stocks as the investment is diversified. even if one stock value come down, still there will be other stocks which will cover for them and hence even though the returns will not be as high, still it will be decent. In case of mutual funds there is no life cover.

Insurance refers to a contract that helps the insured recover losses from the insurance company. A mutual fund refers to investments.

Insurance is not considered an investment tool Rather it is a protection plan, for the family and self. Insurance is securing one’s life or health or article against unforeseen situations, like death, accidents or destruction. If there is a financial loss attached, then that article can be insured against external damages. To overcome the financial loss that may occur if the article or life is destroyed, insurance is done. However, before purchasing the suitable policy, one should compare insurance policies and choose the one best suited for his requirement.
However, Mutual Fund is a fund of investment managed by professionals. It is managed and traded by Fund Managers and individual investors can invest in the same according to the objective of the investment pre-decided by the Fund Managers. They can enter and exit the fund at their will subject to some restrictions, depending on their requirement or their understanding of the fund performance. The investment is always linked to the market risks.