Disability is one of the 3 main wealth protections needs that we ought to plan for, alongside death and critical illness. Yet many of us pay little or no attention to it, because there is generally less social awareness about it, and it often comes packaged together with death coverage.
If death coverage is money that we leave for our loved ones when we pass on, and critical illness coverage is money that we need to be able to continue to support ourselves (and our family) while we are still sick, then what does disability coverage do for us? Disability is a condition that prevents you from performing one or more occupational activities temporarily (short-term), long-term, or totally (total and permanent disability (TPD)). ^1 For the purpose of this article, we will be focusing on TPD.
Defining Disability:
There are 3 common definitions for total and irrecoverable disability aka TPD:
The life assured (LA) is unable to engage in any occupation, business or activity which pays an income.
The LA suffers total and irrecoverable loss of use of: Both eyes, Any two limbs excluding hands and feet, or One eye and any one limb excluding hands and feet.
The LA is unable to perform (be it aided or unaided) ≥3 out of the 6 “Activities of Daily Living” (ADLs) for a continuous period of ≥6 months.
6 Activities of Daily Living
Who should worry about Disability?
Figures from separate studies shed light on the high prevalence of disability:
Almost 1 in 50 Singaporeans will have some form of sensory or physical disability ^2 , with half of them having acquired the disability through an accident or illness such as stroke/cancer. ^3
Almost 1 in 10 Singaporeans (age ≥65) will suffer from early/moderate disability (unable to perform 1 - 2 ADLs). ^ 4
6 in 100 Singaporeans (age ≥65) will suffer from severe disability. ^ 4
The Ministry of Health expects 1 in 2 healthy Singaporeans aged 65 could become severely disabled in their lifetime. ^4 That would mean just about anyone and everyone should be worried about disability as there is a 50% chance of it happening to us.
Disability Payouts
Is Disability expensive?
Contrary to popular belief, our living expenses are not lowered when we become homebound. Instead, it is likely to increase as severe disability can last an average of 4 years. And as high as 30% remain severely disability for 10 years or more. Some of the long-term care required ranges from ^6:
Home-based care, where you hire a qualified caregiver*.
Centre-based care, where you go for physical rehabilitation.
Around-the-clock personal and medical care.
*Caregivers are qualified persons trained to provide nursing care for sick clients, they are not the equivalent of domestic helpers.
The importance of disability insurance should not be underestimated, as disability can easily cost more than death and critical illness. Do you have at least 2 different types of disability insurance?
And for those 30 and older this year, we are happy to provide more in-depth explanation of CareShield Life and its Supplements. Don’t let ignorance get in your way.
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