Know the condition before opting for a fixed deposit with free life insurance

Some banks are offering free life insurance if you open a fixed deposit (FD) with them. But such insurance policies come with a cap and could have conditions and some restrictions.

Take DCB Bank Suraksha FD as an example. The bank has tied up with Aditya Birla Sun Life for the life insurance policy. It’s available for those between 18 and 54 years. According to the bank’s website, customers who have completed 55 years are not allowed to open Suraksha FD.

The life insurance is equivalent to the amount held in the fixed deposit. If you have 1 lakh in the FD, the insurance cover is 1 lakh. However, there’s a cap of 50 lakh. If you hold more than this limit, the cover will still be 50 lakh.

The interest rate is 6.75% on the Suraksha FD, which is for a three-year tenure. There is a restriction on the age and the tenure as there’s a cost attached to it.

ICICI Bank offers a free life insurance cover of 3 lakh. According to its website, the insurance policy available for one year if the customer opens an FD of 3 lakh or more. The tenure of the FD should be over two years or more. . It’s available for customers in the age group of 18 to 50. The bank offers the group cover in partnership with ICICI Prudential Life Insurance.

For both the banks, the life cover is withdrawn in case of premature withdrawal. In the case of joint accounts, the bank covers the primary holder.

As these fixed deposits come with conditions and restrictions, don’t opt for them only for the free life insurance cover. Go for them only if you would have selected the bank without the life cover.

Also, don’t rely on life insurance that comes free with financial products like FD or mutual funds. Buy a term plan that offers a cover of at least 10 times your annual salary. These additional cover can only further boost the primary life insurance policy that you have.

(Do you have personal finance queries? Send them to and get them answered by industry experts)

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