In India, fixed deposits (FDs) are the most preferred investment product.
FDs are one of the safest ways to invest and save money and get a respectable return after the tenor is over. But the interest rates on FDs are historically low.
And that’s why banks are offering extra benefits on these FDs – one of them being health insurance benefits.
Many banks are tying up with various insurance companies to provide services like critical illness cover, pharmacy expenses and OPD consultation along with their fixed deposit schemes.
But are these benefits good enough for you? Let us delve deeper into the topic.
What do they offer?
The FD deals with add-ons like health care insurance may look nice on the surface, but you need to look at the other features of these FDs before investing in them.
- The interest rates in these plans do not change. They offer the same interest rate and a similar tenure to most other FD plans. So even if you choose a plan with Health Insurance benefits, you will receive the same interest rate as the other FD plans. For instance, the tenure that most banks offer is about 2 years, so the health insurance benefits will also only last for 2 years.
- All of these fixed deposit schemes that come with health insurance benefits have limited coverage. Each plan usually covers a different health insurance aspect. Some cover pharmacy expenses and some critical illnesses. But none of them may cover all ailments. Some of the newer schemes also provide cover benefits for COVID-19. But, the covers in these plans may remain limited to about 1-2 lakh. In addition to that, there are many other limitations. For example, under the ICICI bank FD and critical illness policy, the depositor’s age must be below 50. In DCB Bank’s FD and health insurance plan, it should not exceed 70 years.
- There are maximum and minimum limits on most of these add-ons. This means that you cannot deposit lower or higher amounts than the limits set by the bank. In some banks, the minimum deposit amount can be as low as Rs. 10,000, while the highest can go up to Rs 3 lakh.
Should you opt for them?
While looking for FD schemes with extended health insurance benefits, you must remember a few things.
- These schemes are pretty much the same plan with the same tenure and interest rates as the standard FD schemes. They do not offer extra returns or higher interest rates.
- A lot of these schemes may not be in tandem with your FD tenor.
- Some plans only cover only a few basic health needs.
- Most of these plans tend to cater to only senior citizens.
- In most cases, these fixed deposits plus health insurance plans only cover the first depositor.
- The cover amount that these plans offer is generally pretty low and might not be enough if you face a serious health problem.
- Since fixed deposits are illiquid, you may also lose the insurance cover if you break them.
- Most banks offer this insurance benefit free of cost. You should check that as well before selecting such FDs
Another crucial thing to remember is that these plans are in no way, shape or form a replacement for comprehensive health insurance plans.
So, should you opt for them? The answer depends on your personal circumstances, coverage, health insurance status and more. If you were to opt for such a scheme, study all the plans and offers completely carefully before committing to any. Read all terms and conditions of the plan and only then invest.