ICICI Bank FD Xtra, a fixed deposit with extra benefits: Decoded

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Published: February 26, 2019 4:32:40 PM

A look at some of the features of ICICI Bank FD Xtra that includes FD Life, FD Invest and FD Income and see how they work.

ICICI Bank FD Xtra, Bank fixed deposits, ICICI Bank, FD Xtra,recurring deposits,Free life cover with FDBank fixed deposit remains a popular investment option especially amongst the fixed-income investors and primarily the senior citizens.

Bank fixed deposit (FD) has always been a simple investment avenue with a minimum of complexities. One just needs to decide on the tenure and the interest payout frequency. No wonder, bank FD remains a popular investment option especially amongst the fixed-income investors and primarily the senior citizens.

However, if an investor is looking for a FD with extra benefits without paying anything extra, there’s one to choose from. ICICI Bank has recently launched a bouquet of new features to offer in their FD Xtra, a range of innovative fixed and recurring deposits with several new benefits.

Let’s look at some of them ( FD Life, FD Invest and FD Income) and see what they are:

1. Free life cover with FD

Under FD Life variant, the FD comes with a life cover for any account holder between the age 18 and 50 years. The cover is on a minimum deposit of Rs 3 lakh and for a minimum tenure of 2 years.

The life cover is restricted as the maximum cover is capped at Rs 3 lakh and therefore, an FD for say Rs 15 lakh, will still fetch a cover of Rs 3 lakh. Also, life cover is free only for the first year. To continue with life coverage, one will have to pay the group insurance premium in the second year.

2. Withdrawal of life cover

In the case of partial or any premature withdrawal of such deposits, the free life cover will be withdrawn from the date of partial or premature withdrawal. The penalty, if any, on exiting FD may also apply as per the rules of the bank.

Invest only if the funds are not required until maturity. Else, opt for a loan or avail an overdraft facility to tide over liquidity condition rather than breaking such FDs.

3. Group life cover

The life cover being provided by the banks is a group insurance cover through a life insurance company. Separate policy certificates will not be sent, however, a receipt showing the name and other details will be sent to the FD holder.

4. Joint holdings

Although such deposits may be opened by resident individuals either on single or joint holding, the life cover will only apply to the first deposit holder.

5. Interest payouts

The bank FD carries interest payout options of monthly, quarterly, half-yearly and annual. Such options will apply even to these FDs.

6. Declaration

Insurance is a contract between the insured and the insurer and rests on the principles of good faith. While filling the application form for such FD, one needs to provide a declaration of good health. On declaring that one is not in good health, the life cover is not be provided. But remember, any misleading declaration may repudiate the claim.

7. FD plus MF SIP

On opening ‘FD Invest’, the monthly interest earned on the principal invested gets invested in Mutual Fund (MF) SIP. Importantly, the holding pattern or the mode of operation should be single.

The minimum FD amount that would be required for FD Invest would be Rs 2 lakh and can be opened for any tenure ranging from 12 months to 10 years. The FD will, however, be opened with monthly interest payout mode.

The SIP will have to be only from within the MF schemes of ICICI Prudential Mutual Funds which could either be debt funds or equity funds. Make an informed choice based on the scheme’s consistent long term performance rather than merely banking on the ease of transaction. The interest earned remains fully taxable in the year of receipt.

8. FD Income

In ‘FD Income’, a cumulative FD for a minimum of Rs 2 lakh for a minimum period of 24 months (in the investment phase ) gets opened. On completion of the investment phase, the entire maturity proceeds including the principal and interest get invested in the Annuity Fixed Deposit for the Payout period.

For example, if one invests Rs 2 lakh for 24 months at 7.25 percent, the corpus becomes nearly Rs 230,908 during the investment phase. On maturity, this corpus is not handed over to the FD holder and instead, during the payout phase, a monthly payout of Rs 10,365 is paid for 24 months. The interest rate applicable will be for four years, in this case.

The FD is designed such that there is no option for regular interest option during the investment phase. Choose to go with this version of FD, if there is a requirement of such nature.

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