ICICI Bank FD Health: An FD-cum-health insurance sounds good, but does that cover you enough?

Bank customers between 18-50 years get complimentary critical illness cover of Rs 1 lakh for 1 year if they open an FD of Rs 2 lakh to Rs 3 lakh for a tenure of at least two years

Kumar Shankar Roy Oct 15, 2019

ICICI Bank FD healthICICI Bank has announced the launch of ‘FD Health’, a Fixed Deposit (FD) offering the dual benefit of investment growth via FD and protection through a critical illness coverage. The customers will be offered the insurance cover free of cost for the first year and thereafter, they can renew it. While the intent behind such a product is good, in its present form ‘FD Health’ does not deliver any sustainable benefit that will motivate you to shift to ICICI Bank for opening fixed deposits. RupeeIQ explains why.

What is FD Health

FD Health is a fixed deposit product by ICICI Bank that provides the customer a complimentary critical illness cover of Rs 1 lakh from ICICI Lombard General Insurance Company on opening an FD of Rs 2 lakh to Rs 3 lakh for a tenure of at least two years.

The market interest rate for a two year FD is between 6.5-7% per annum in top banks, though smaller banks are known to pay a little more.

FD Health is open for customers who are in the age bracket of 18-50 years. Put simply, FD Health is a scheme that gives you a complimentary insurance cover for one year on 33 critical illnesses. The list of critical illnesses under the policy includes specified severities related to cancer, lung disease, kidney failure, liver disease and benign brain tumor, Alzheimer’s disease, and Parkinson’s disease.

Claims process

In the case of FD Health product, ICICI Bank is acting in the capacity of the group master policyholder sold by ICICI Lombard General Insurance Company. If there is any claim under the policy, you have to contact ICICI Lombard about your claim by calling on their toll-free number 1800 2666 or on their website.

You will have to furnish a policy certificate with the necessary and mandatory information and documentation specified within 30 days of diagnosis.

No claims will be paid if the insurer thinks the symptoms indicative of the critical illness have first manifested or first occurred prior to the risk inception date or arisen within first 90 days of commencement of the period of cover, or critical illness arising on account of or in connection with any pre-existing disease(s), or out of any congenital anomaly of the insured person etc. Claims also may not be paid if critical Illness is traceable to pregnancy, childbirth, abortion, or related consequences.

The bank speak

According to Pranav Mishra, Head – Retail Liabilities, ICICI Bank, said, “FDs have been a fundamental investment option for most individuals, irrespective of their risk appetite. With the prevailing volatility in financial markets, we see a renewed interest by customers to invest in FDs as they offer a combination of attractive interest rates, liquidity, the safety of capital and assured returns. We have got an encouraging response to the recently launched ‘FD Xtra’, a series of innovative deposit products.

“Now, we are pleased to launch ‘FD Health’ in order to offer customers protection through critical illness insurance. This offering is a first in the industry and provides the advantage of safety and growth of a fixed deposit along with protection of critical illness cover which will provide financial help, if needed. It comes with a complimentary insurance covering 33 critical illnesses for a period of one year for sum insured of Rs. 1 lakh to the FD holder,” says Mishra.

Sanjeev Mantri, Executive Director, ICICI Lombard General Insurance, said, “In today’s times, while customers have multiple investment options, fixed deposits continue to be an attractive proposition. The bank’s latest fixed deposit offering, ‘FD Health’ offers a unique blend of assured returns from an FD coupled with health protection against critical illnesses. With the emergence of lifestyle diseases amid rising medical treatment costs, a health protection cover is no longer an option but a necessity. With the unique dual proposition offered by ‘FD Health’, one can stay covered against medical expenses, without having to break one’s savings.”

The caveats

There are some important things that you should consider.

1. The critical illness cover will be available on cumulative FDs opened with amounts from Rs 2 lakh and above to less than Rs 3 lakh.

2. The critical illness cover will be available on cumulative FDs opened for a period of minimum 2 years.

3. FD Health can be opened by resident individuals i.e. FD account holder where the mode of holding is either single or joint. The FD Health – Critical illness Cover will be provided to only the primary holder of the FD account.

4. The customer should be aged from 18 to 50 years.

5. Critical Illness Cover will be valid for a period of one year. Critical Illness Cover policy will be issued to customers after opening of FD.

6. Eligible customers should provide a declaration of good health. If a customer declares s/he is not in good health, the Critical Illness Cover shall not be provided.

7. Partial/Premature withdrawal will be permitted as per the Terms & Conditions agreed to. In the case of Partial/Premature withdrawal of deposit, the free critical illness cover offered to customers may get terminated from the date of partial/premature withdrawal.

In the case of Partial Withdrawal where the FD Principal continues to be above the specified amount, the FD would continue to enjoy the free critical illness cover.

RupeeIQ take

There are three things that we do not like about ICICI Bank FD Health.

One, the critical illness coverage is offered only for 1 year, which means from 2nd year onwards you will have to pay the renewal premium. Hence, the period of coverage is very short — it goes away too soon unless you continue coverage from your own pocket. Critical illness risk is not a one-year affair. It can loom as long as you are alive. Twelve months is a short period of cover.

Two, the critical illness coverage amount is Rs 1 lakh, which is again very less. Critical illnesses like cancer, lung disease, kidney failure, liver disease and benign brain tumor, Alzheimer’s disease and Parkinson’s disease require much more than Rs 1 lakh for treatment. The figure should have been at least Rs 5 lakh.

Three, the 18-50 years age group limitation for FD Health customers basically implies that only the ‘healthiest’ category of customers can get Rs 1 lakh coverage. Critical illness ailments are known to strike older people than young, barring exceptions. Ideally, every customer, irrespective of their age, should get the free critical illness coverage for one year for opening a specified FD.

Depositors should invest in FDs from ICICI Bank because it is a reputed bank with strong finances, and pays competitive interest rates. If you feel ICICI Bank FDs give you both, invest in the deposits. But investing in an FD because of a Rs 1 lakh free critical illness cover that too for one year is not worth it. Put simply, the freebie is not appealing enough.

The bank should also make a provision that in effect leads to a good premium discount for ICICI Bank FD Health customers for as long as they want to continue the cover. But in its current form, the Rs 1 lakh cover for 1 year is a benefit that is too little and that goes away too soon.

Disclaimer: Views expressed here in this article are for general information and reading purposes only. They do not constitute any guidelines or recommendations on any course of action to be followed by the reader. The views are not meant to serve as a professional guide/investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or investment.


Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at kumarsroy@rupeeiq.com.

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