SBM's savings plans with accident insurance
How about getting a accident death insurance cover at no extra cost just by keeping money in a bank account? It may sound impossible but this is what the Bangalore-headquartered State Bank of Mysore (SBM) has started offering from Thursday.
SBM has launched three new deposit schemes with free accident death insurance cover for savings bank and term deposit account holders.
The bank has branded these schemes as: MyBank Suraksha Savinga Accont, MyBank Suraksha Savings Plus Account and MyBank Suraksha Deposit Account. For insurance cover under these schemes SBM has tied up with National Insurance Company Ltd. For all schemes the insurance cover will be provided initially for one year and is subject to review at the end of one year. For all these three schemes, in case of joint accounts, insurance cover will be provided to first named person.
Announcing the schemes, SBM Chairman & Managing Director Dilip Mavinkurve said “by adding accident death insurance covers we are offering value added services to our customers at no extra cost. Moreover, it will also encourage people to save more for the future.” SBM’s initial target is to get 15,000 accounts covered under the insurance scheme. “We are just testing the market with this launch. If the response is good, which I am sure will be, we will look at expanding the service with more products,” said General Manager A K Basu.
The details of the schemes are as follows:
Under Suraksha Savings scheme, the account holder will get a free accident death insurance cover for Rs 2 lakh along with concession in cheque book charges, and higher number of permissible debit entries. But to be eligible, one needs to keep a quarterly minimum balance of Rs 10,000 in the account. Good news is that existing savings bank account holders can also shift to this by opting for it in writing.
Under Suraksha Savings Plus scheme the account holder will get a free accident death insurance cover for Rs 5 lakh along with concession in cheque book charges, and higher number of permissible debit entries. In this case he or she needs to keep a quarterly minimum balance of Rs 25,000 in the account. Existing customers can also switch to the scheme.
In case of Suraksha Deposit scheme the depositor will get a free accident death insurance cover for Rs 5 lakh without any reduction in the applicable rate of interest.
The customer needs to keep a minimum deposit of Rs 1 lakh for a period of one to three years. In case customers have multiple accounts and deposits with SBM, in the same branch or in other branches of the bank, SBM has kept a cap of Rs 10 lakh for maximum claim settlement per person for all the three schemes.
Though the primary objective of SBM in introducing these products is to go beyond the plain vanila banking by offering value added services, such products will lure more people to join the bank. This, in turn, will help SBM raise its CASA (current account savings account) ratio, currently at 32 per cent and lower than the PSU banks’ average.
The Bank will also partly recover the additional cost for insurance cover from the larger float coming from the need to keep higher minimum balances under the schemes.
Besides, it has also factored-in the low moratility rate from accidents to offer the insurance benefit.
But whatever may be the gain for the bank, its customers will benefit tremendously if they opt for the insurance schemes.