Should I Go For FDs Considering Health Cover Benefits?

Updated: Monday, January 11, 2021, 16:12 [IST]

Bank Fixed Deposits (FDs) interest rates are at record lows. Banks are presenting FDs with additional perks, such as health insurance in order to lure more investors. In November 2020, DCB Bank introduced an FD with healthcare insurance. ICICI Bank also provides an FD that includes benefits in various forms, namely health and life insurance benefits. In total, banks team up with health insurance providers to offer advantages under group insurance and these perks range from bank to bank.

For instance, under its Health Plus FD, DCB Bank has partnered hands with ICICI Lombard General Insurance Co. and provides benefits such as OPD (out-patient) appointments and medicine costs to a certain cap, among other benefits. Under its FD Extra option, ICICI Bank offers an essential illness policy. Last year, Yes Bank partnered hands with Reliance General Insurance to provide with COVID-19 Cover benefits. Some of the advantages learned in such services are helpful to clarify.

ROI and maturity period

Standard rates are usually provided by these FDs. So, with no additional benefit, you can get the same deposit rate as given on a regular deposit. The maturity duration is, however, pre-defined. For instance, the FD of DCB Bank is only available for a tenure of 700 days whereas the minimum term for ICICI Bank's FD is two years respectively.

Upper limit for deposit

Generally, there is a limit on the minimum and overall amount of investment. For comparison, the FD of DCB Bank has a minimum investment amount of Rs10,000, whereas the FD of ICICI Bank has a minimum and maximum investment cap of Rs 2 lakh and Rs 3 lakh.

Limited Health Insurance Benefits

The insurance offered in compliance with these policies is minimal. In the context of ICICI Bank's FD, for instance, the critical illness insurance is for Rs 1 lakh only but there are age restrictions as well. For instance, to deposit in ICICI Bank's FD, the investor should not reach 50 years of age; the cap for DCB Bank's FD is 70 years respectively.

Does It Make A Sense To Invest?

With additional perks, these FDs have the same interest rates. Well, if you are depositing and satisfying all the requirements for the same tenure, you can accept them, but be alert before depositing, check the terms and conditions thoroughly. For example, one of the FD options has a two-year maturity period, but only has healthcare coverage for one year. Another type of FD has a number of advantages that differ based on the amount deposited. The standards for the minimum and maximum age often differ across FD schemes. Even, don't focus on your health care policy for it.

In most instances, the cover may not be worthy for you and the health insurance benefits can apply only to the primary depositor. As well, the health cover will be lost if you want to break or exit from the FD scheme. As well, if you need to split the FD, the health cover will be lost. Most significantly, you will no longer be entitled to use the policy on the next extension if the bank's liaison with the insurer breaks. We also suggest that all factors must be analysed before participating in these FDs.

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