The rate of interest on bank FDs is at a historic low. Therefore, to attract their customers, the banks are now offering many other benefits with fixed deposits. One of such benefits is a health insurance benefit with a fixed deposit. DCB Bank has launched this scheme in November 2020. ICICI Bank has as well providing FDs with benefits like life insurance, health insurance in different variants.
Generally, banks tie-up with health insurance providers and provide insurance benefits with group plans. The benefits offered in health insurance plans vary from bank to bank and depend on their tie-up with insurers.
DCB Bank tied up with ICICI Lombard and now it is offering advantages like OPD consultation, expenses of pharmacy to a certain extend with other benefits. On the other hand, ICICI Bank is providing critical illness cover with its fixed deposit account as an extra option.
Even though these deals look nice, but are they worth to invest or should you consider such fixed deposits? Let us understand this by getting to know some of the features of these FDs:
These fixed deposits offer the same rate of interest with add-on benefits. Therefore, in case you want to invest for the same tenure with the eligible amount, you can consider these fixed deposits. However, if you are planning to invest in these fixed deposit schemes, you must know the offer completely.
It is necessary to read all the terms and conditions very carefully before investing in any scheme be it a fixed deposit of banks. For example, one of the fixed deposit variants has a tenure of two years, but it offers health cover only for one year. Another variant of the bank's fixed deposit provides a range of benefits that varies as per the invested amount. The age criteria may as well vary across various fixed deposit products. As per the industry experts.
One more aspect as a depositor you must consider is that the deposit should not completely depend on the health insurance covers. These benefits are not at all replacement for a comprehensive health insurance plan. In most cases, the insurance cover can extend only to the first depositor. The coverage amount may also not be enough and if you want to break your fixed deposit, you may lose the health cover as well.
So, if you are going to invest in a fixed deposit account, you must remember the following factors before selecting one:
Basic features of a bank’s fixed deposit are:
Summing It Up:
Fixed deposits offered by banks are one of the safest investment options because all the deposits that are under Rs. 1 lakh are insured. If the bank in which you have opened an FD account defaults, you get the principal amount that is up to Rs. 1 lakh as per the deposited amount under insurance coverage. If you have invested in multiple accounts in different banks, then each FD is insured up to Rs. One lakh. The banks as well offer tax exemption under section 80C of the Income Tax Act, 1961.
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The most important thing to remember here is the bank that is issuing the fixed deposit scheme with an additional benefit is not the insurance provider. If the tie-up of the bank with the insurer ends, you may not be able to avail of the facility of insurance upon the next renewal of FD. So, when an additional benefit like health cover is always welcome, keep your investments, insurance, and savings goals separate.