When you buy or invest in a financial product, most often you forget to enquire from the service provider about its features or any extra benefit associated with it. Other than partner rewards, people are often not aware of big benefits they are being offered — one such thing being insurance. There are many financial products which come with an add-on insurance benefit. Once you become aware of it, then it can help you in a big way in your life. What is more, usually you don't need to pay any extra money to avail such facilities.
Here are some popular financial products that offer complimentary insurance, but remember that these benefits come with attached pre-conditions. So, you must be aware of them.
1. Insurance with credit cards
Insurance cover associated with credit cards varies depending on the card type, it's limit and the service provider's offer. You can know about details of insurance offered by the credit card company by reading the fine prints attached with the welcome kit.
There are many credit cards available in the financial market that offer insurance covers which include benefits like accidental cover, baggage insurance, rental car collision damage cover, travel accident protection, trip cancellation cover and more. You get the specified insurance cover which your service provider allows with your card. Insurance type may vary from company to company.
Usually credit card companies offer complimentary insurance up to Rs 50 lakh in India, which may go up in some cases. For example, Snapdeal HDFC Bank Credit Card as well as HDFC MoneyBack Credit Card offer free Accidental Death Insurance up to Rs 50 lakh, while with the Jet Airways IndusInd Bank Voyage Credit Card, you get a complimentary Personal Air Accident Insurance Cover of up to Rs 25 lakh.
"Do remember though that for availing such insurance benefit, it is important that your card remains active, and you also fulfil the criteria to get the respective insurance cover. For example, the card company may have condition that you must use your card a certain number of times in a specified period to avail such cover or if you are looking to avail travel-related insurance cover, then there may be a condition that you should book the air ticket using the concerned card," says Adhil Shetty, CEO, Bankbazaar.
2. Insurance cover with debit cards
Similar to credit cards, there are some debit cards available in the market which offer different types of insurance covers as a complimentary benefit. Types of insurance may include personal accident cover, purchase protection cover, and permanent disability cover, among others. However, the eligibility criteria to get such complimentary insurance cover may vary from company to company. You may also need to maintain a minimum average balance in the linked savings account. Moreover, the card may need to be active at the time of occurrence of an event or while making the claim. Insurance may be denied under gross negligence, breach of law or delay in reporting the claim within the stipulated timeline in certain cases.
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3. Complementary insurance with mutual funds
There are some mutual fund companies which offer complementary insurance cover with the SIP schemes. If an investor dies before the completion of the SIP tenure, then the rest SIP instalments are paid by the insurance companies. It takes the financial load of the nominee to pay the remaining SIP instalments.
"There are, however, some terms and conditions attached to this insurance. It may require you to pay SIP for a certain period to get the insurance protection. On completion of the SIP tenure, the protection benefit seizes automatically," says Shetty.
4. Bank Deposits
Bank deposits, particularly fixed deposits, have always been an ideal investment avenue, especially for risk-averse investors. However, not many people are aware that bank deposits have an inbuilt insurance cover also. In fact, bank deposits, including fixed deposits, up to Rs 1 lakh are guaranteed by the Deposit Insurance Guarantee Corporation of India (DIGCI). Therefore, in case a bank becomes bankrupt, your bank deposit or FD up to Rs 1 lakh will remain safe.
If you are a salaried person and also an EPFO (Employees' Provident Fund Organization) member, ie. if you contribute towards the EPF and are an active member of it, then you are also eligible for an insurance cover up to Rs 6 lakh. In fact, your nominee or legal heir will get a lump sum payment of up to the above-mentioned amount in case of your death during the service period. This insurance cover is called the Employees' Deposit Linked Insurance Scheme (EDLI). The cover depends on the salary drawn during the past twelve months of the employment before death.
Not a Substitute for Actual Insurance
Though complementary insurance seems very attractive and covers certain types of risks, but you must not ignore the regular insurance products to cover specific risks. You may find the cover assured in complementary insurance to be lower than what you may actually need. Therefore, getting regular insurance products like term insurance or medical insurance will ensure that you do not remain exposed to risk due to underinsurance.