Union Bank of India (UBI) has launched a new deposit scheme called the Union Wellness Deposit Scheme. This scheme combines a fixed deposit with health insurance benefits.
By investing, you can earn interest and receive health insurance coverage. UBI has partnered with Manipal Cigna Health Insurance to offer this coverage. Here’s a look at the features of the scheme.
Investment Requirement and Insurance Coverage
To participate in this scheme, a minimum deposit of Rs 10 lakh is required for a period of 375 days.
In return, you will receive a health insurance policy with a coverage of Rs 5 lakh. The bank will pay the premium for this policy.
You can invest up to Rs 3 crore in this scheme, and UBI is also offering a complimentary super top-up policy with an additional Rs 5 lakh coverage.
However, the health insurance is a one-time benefit. If you renew the FD after 375 days, you will not get the insurance coverage again.
Interest Rates
The scheme offers an interest rate of 6.75%, which is 7.25% for senior citizens.
Joint accounts are allowed, but the insurance coverage is only available to the primary account holder.
There is a 30-day waiting period before the insurance coverage kicks in. The scheme is available for individuals aged 18-75 years.
Who Will Benefit from This Scheme?
Senior Citizens: According to Lieutenant Colonel Rochak Bakshi (Retired), founder of True North Finance, senior citizens could benefit the most from this scheme because it provides additional health coverage.
Moreover, the interest rate of 6.75% is higher than that of other banks, such as HDFC and ICICI, which offer rates between 6.60% and 6.70% for similar FD durations.
Limitations for Small Investors: However, Shivam Pathak, founder of Asset Elixir, points out that the minimum investment requirement of Rs 10 lakh makes this scheme less attractive to smaller investors.
Additionally, the health coverage is limited to just 375 days, and you won’t get it if you renew the FD.
DICGC Guarantee and Risk Consideration
The Deposit Insurance and Credit Guarantee Corporation (DICGC) guarantees deposits of up to only Rs 5 lakh.
So, while you may invest Rs 10 lakh, DICGC will only provide insurance cover for up to Rs 5 lakh of your deposit.
Should You Invest?
This FD scheme is not a replacement for a regular health policy. The health coverage is only valid for 375 days and does not carry over if you renew the FD.
The scheme may be beneficial for senior citizens due to the free health cover of Rs 5 lakh, which could be costly for them to obtain otherwise.
However, if you’re primarily interested in health insurance, it’s better to invest in a regular health policy that you can renew annually, ensuring long-term coverage.
This scheme is a good option for large investors who want to combine health insurance with FD interest, but for smaller investors, or those seeking long-term health coverage, it may not be the best choice.
