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Yes Bank News | YES Bank's FD is providing free health insurance for coronavirus: Should you invest?

Yes bank news - YES Bank recently launched a new Fixed Deposit (FD) Product bundled with health insurance coverage for COVID-19 illness. The bank has partnered with Reliance General Insurance to provide FD plus  COVID 19 cover.

In a statement, YES Bank said that it will bear the cost of the premium for a sum assured of Rs. 25,000, in the case of depositors who will invest Rs 1 lakh in this FD. So, in such a case, should you invest in such FD? Is COVID insurance cover worth it??

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What the YES Bank FD is offering you

Currently, offer to reserve this YES Banks FD package for a limited period according to Yes bank news, that is, till June 30, 2020. However, before investing in this FD, take a look at the following three points:

  1. To get COVID-19 coverage, you must invest at least Rs 1 lakh in YES Bank's FD. Moreover, you only get only one health insurance policy of Rs 25,000 insured even if you book several multiple FDs - Yes bank news.

Amol Joshi, the founder of Plan Rupee Investment Services, said the insured amount was set at Rs. 25,000 irrespective of the number and total of fixed deposits open during the offer period. "In the case of common fixed deposits, the main depositor will only be covered under the policy," Joshi said. 

  1. If we compare the FD interest rates of YES Bank with those provided by other large private sector banks such as ICICI Bank and HDFC Bank, YES Bank offers a higher interest rate of 7.25 percent on FDs for one year. By comparison, ICICI and HDFC Bank currently offer interest rates of 5.55 percent and 5.60 percent, respectively, in DFF for one year.

Suresh Sadagopan, the founder of Ladder7 Financial Advisories, said this coverage may be useful for those who do not have health insurance and are interested in the current health crisis. “However, you should not deviate from your free COVID coverage. The important thing is that you need to assess whether YES Bank FD is good in nature, the risks here are acceptable, and whether you want to invest at least Rs 1.” Sadagopan added.

  1. Depositors must remember that COVID-19 coverage is valid for one year from the opening of FD having tenure of 1 year and above. This policy is only available to primary FD holders under the age of 60 years. This clearly excludes senior citizens from the cover. 

The exclusions under the free COVID-19 policy: The COVID-19 policy offered with YES Bank FD comes with a 15-day waiting period. Country-specific restrictions have been imposed for making policy claims. Basically, the policy excludes any travel to the restricted countries for 45 days before the policy start date. No claim will be paid if the insured person lives and shares the same address of persons who were diagnosed with COVID-19 or were isolated at the time of application. And the self-quarantine is not covered, according to Reliance General Insurance's COVID-19 policy document.

Apart from this, any pre-existing condition, whether declared or not declared, is not covered. If the testing is done at a diagnostic center not approved by the Union Health Ministry of India, the claim will not be payable under this policy.

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Should you invest in FD?

Yes bank news - YES Bank is likely to offer the highest interest rate on its FDs and a bundled COVID-19 insurance to attract depositors back but here is what experts have to say:

The first thing to remember is that health insurance policy coverage must be in line with the requirements of the police buyer after looking into all matters, said Prableen Bajpai, founder and managing partner, Finfix Research & Analytics. “Even if we see this offer as additional coverage for COVID-19, the amount of Rs 25,000 will not be sufficient in the case of hospitalization. This coverage is mainly provided to encourage depositors to book a fixed deposit. If you plan to deposit funds in Bajpai said 'fixed deposits irrespective of this offer, it can be considered an additional token benefit, but it should not be the reason for booking an FD. "

This simply means that the health coverage of the included COVID-19 should never be the only reason for choosing a fixed deposit option.

In addition, you must analyze the financial position of the bank before investing monies. However, if you  are unable to do so, it is better to stick to larger banks and big names, rather than go with a smaller bank that offers higher interest rates.

“You should know that irrespective of investing in various FDs, health coverage of only Rs. 25,000 is provided, which is very low given the cost of COVID-19 treatment. Also, the bank is not helping with the claims process,” said Mrin Agarwal,  Founder Director,  Finsafe said. “The bank gives a much higher rate on FD compared to other private banks and the product is used to attract new deposits at the moment. Given the health of the bank and the small coverage provided, I would not recommend this product,” she said. 

What you should do

One should never mix investment with insurance.. "You must separate insurance from investment, and those who do not have sufficient health insurance coverage must purchase a regular health insurance policy," said Naveen Kukreja, CEO and co-founder, Paisabazaar.

The Insurance Regulatory and Development Authority of India (IRDAI) has also announced that all health insurance policies that cover hospitalization costs will also cover hospitalization costs from treating a COVID-19 infection.

Consequently, the standard indemnity health insurance policy will also cover hospitalization related to COVID-19. Therefore, a specific COVID-19 cover might be required. “If one does not have health coverage at first, then the need for the hour is to get this coverage, especially floater cover for the family. This is because the hospitalisation expense is likely to be more than Rs. 25,000  cover offered with YES Bank's FD," Joshi said.

Source: Economic Times

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