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How to get insurance with the help of Fixed Deposits?

After the outbreak of coronavirus in India and the sudden imposition of lockdown throughout the country in 2020 and also the recent news of a second wave of COVID- 19 in India with subsequent lockdowns in the States has made people understand how essential financial planning in life is at such a worst situation. Those people who never saved or saved without good planning and had to face hardships, lack of money at the right time during these 2 years, forced people to choose any one of the saving modes. Be it for in shares or mutual funds or Fixed Deposits (FDs) or Public Provident Fund (PPF) or Systematic Investment Plan (SIP) etc. 

In this article, the main focus is on Fixed Deposits and how you can get free government insurance on your bank FDs up to 65 lakh. One best way suggested by many is that you invest in your FD including maturity up to Rs 5 lakh of different rights and capacities. Nowadays we are getting to see many banks are going into losses or facing financial stress like in the case of YES Bank, PMC Bank, etc. and hence it is safer for you if you distribute your money in different fields instead of keeping it in one place and losing all at once.

So, it is advised for you to keep deposits including maturity up to only Rs 5 lakh in the same right and capacity because the Deposit Insurance and Credit Guarantee Corporation (DICGC) offers an in\surance cover of only up to Rs 5 lakh, yet it is not sufficient for most of the depositors. Hence here are the ways how you can deposit your money smartly in FDs with safe insurance cover. Savings Deposits, Fixed Deposits, Current Accounts, Recurring Deposits, etc. are covered under the insurance cover of DICGC. One need not deposit in various banks but has to deposit in one bank with different rights and capacities. 

As said by DICGC, every depositor can get an insurance cover up to Rs 5 lakh for both principal amount and interest amount, which means those accounts of yours with the same right and capacity will be clubbed together and will be given total insurance cover of Rs 5 lakh which includes both principal and interest amounts only at the time of cancellation or liquidation of bank’s license or in any similar case. So it means if your deposit is Rs 5 lakh excluding interest then you will get only Rs 5 lakh and not more than that. If your deposit amount totals up to Rs 5 lakh or less then you will get Rs 5 lakh or an equal amount as per your amounts respectively. On account of people having deposits in different rights and capacities, will be receiving separate insurance cover for every right and capacity. 

Let us take an example wherein ‘A’ is the head of the family and ‘B’ is his wife with ‘C’ and ‘D’ as his kids and ‘E’, ‘F’ as his mother and father respectively. A decides to open different kinds of accounts in the same bank (or indifferent branches) like individual account and other deposit accounts in his capacity as either a partner of a firm or as a guardian of a minor (his children) or as a trustee of a trust or as a director of a company or in a joint account with his wife B.

Therefore he will be receiving an insurance cover of Rs 5 lakh which will be separate for separate accounts. In this particular example, 13 separate accounts can be created with an insurance cover of Rs 5 lakh, which means 13×5=65 lakh. Hence this is how you can get government insurance of up to Rs 65 lakh on FDs. 


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