Anand, the sole bread earner of his family, wanted to ensure he has additional savings of about Rs 5 lakh over six to seven years.

He could set aside Rs 5,000 per month, apart from meeting his other savings/investment commitments.

He was looking around for options to generate additional Rs 5 lakh of savings pool for his family even if he died prematurely. And that's when he came across a recurring deposit scheme with a life insurance cover.

Union Bank of India's [Get Quote] 'Union Insured Recurring Deposit' (UIRD) exactly fitted his scheme of things. Against a saving of Rs 5,000 per month, the scheme offers life insurance cover of Rs 5.20 lakh.

The sum assured is equivalent to the amount receivable by the account holder on maturity including interest.

And if death befalls the account holder anytime after 45 days of opening the account, the nominee will get the sum assured of Rs 5.20 lakh.

LIC [Get Quote] will reimburse the difference between the maturity value and monies deposited with interest accrued to the nominee through the bank.

Union Bank has an arrangement with the Life Insurance Corporation for the scheme.

The bank bears the insurance premium of the future accrued interest. It pays the premium directly to LIC. The bank every month pays Rs 384 per Rs 1 lakh of sum assured as premium.

The premium gets reduced each year as the amount in the recurring deposit account increases.

In the event of death of the account holder, the sum assured is paid immediately to the nominee and the premium expense is absorbed by the bank.

If the account holder lives on through the term of the recurring deposit, the insurance premium is deducted from the amount payable on maturity. For a sum assured of Rs 5.20 lakh, the premium for seven years works out to nearly Rs 8,570.

Dena Bank [Get Quote], which recently signed a bancassurance pact with LIC, is also developing deposit products with life insurance cover.

Union Bank has given the choice of opting for the life insurance cover to all is existing recurring deposit account holders. Life cover is available to account holders aged above 18 years and below 55 years.

The minimum monthly deposit under the UIRD scheme is Rs 100 per month and multiples thereof and the maximum is Rs 10,000 per month. The minimum period of the account is 3 years and maximum is 7 years.