Singapore is one of the few countries where its citizens have the luxury of access to basic government insurance policies. But is basic good enough in an expensive country like Singapore?
Types of Government Insurance Policies:
Dependants' Protection Scheme (DPS)
Careshield Life
Home Protection Scheme (HPS)
Dependants' Protection Scheme:
It is meant to give an insured member and the family a sum of money to get through the first few years after an insured member passes away or suffers from terminal illness (TI) or total permanent disability (TPD).
Key features of DPS:
Automatic Enrolment: All Singaporeans and Permanent Residents (PRs) are automatically enrolled into DPS upon their first valid CPF working contribution between age 21 and 65.
Cashless Expense: You can use your CPF Ordinary Account (OA) (or CPF Special Account if there’s insufficient balance in your CPF OA) to pay for the premiums.
What to take note of:
Policy expires when you turn 70.
Sum assured decreases from $70,000 to $55,000 when get older (60 yo & above)
Careshield Life:
1 in 2 Singaporeans above 65 could become severely disabled in their lifetime and may require long-term personal and medical care. While DPS ends when we turn 70, CareShield Life offers lifetime coverage.
Key features:
Compulsory for Singaporeans and PRs: Enrolment is automatic on 1 Oct 2020 or when you turn age 30, whichever is earlier.
Pre-existing medical conditions and disabilities are covered: No exclusions, and there are no additional premiums.
Lifetime coverage: The premium payment term is only until age 67 or 10 years after joining the scheme, whichever is later.
Lifetime cash payouts: Monthly payouts will continue if you remain severely disabled.
Worldwide Coverage: You can make a claim even if you are residing overseas.
Premium payments stop once claim is made: Once a successful claim is made, you no longer need to continue paying premiums.
Cashless expense: Premiums for CareShield Life are fully payable by MediSave.
Assessments and reassessments required for claim: To make a claim, you will need to be assessed by a MOH-accredited severe disability assessor to be unable to perform at least 3 out of 6 Activities of Daily Living (ADLs), and submit the application to the Agency for integrated Care (AIC). Annual periodic re-assessments may also be required to determine if the individual still meets the eligibility claim requirement.
It’s cash payout isn’t substantial: The payouts ($612/mth in 2021) are unlikely to be able to meet the basic living expenses ($1,379/mth**) for the elderly (≥65 yo), nor the cost of long-term care (average cost of $2,324/mth**).
Home Protection Scheme (HPS):
It is a mortgage-reducing insurance that protects you from losing your HDB flat in the event of death, TI or TPD.
Key features:
Protects you up to age 65 or until the housing loan is paid up, whichever is earlier: HPS will pay off the outstanding housing loan of the life assured, up to the sum assured based on the percentage share of cover in the event of death, TI or TPD.
Cashless expense: Premiums can be paid with your CPF OA, or cash if there is insufficient balance.
What to take note of:
You can be exempted from it: You will need to already have coverage against death, TI, and TPD, from a whole life, term life, endowment, or mortgage insurance, that is able to cover your outstanding housing loan up to full term or age 65, whichever is earlier.
It’s not portable: HPS will be terminated when you sell your HDB. This means higher premiums when you apply for HPS or a private mortgage insurance for your next property. And subjected to exclusions/additional premium, depending on your health conditions.
Payout isn’t in cash: HPS directly settles the outstanding housing loan with HDB or the bank when a successful claim is made. So, while you get to keep the house, you and/or your family may still face difficulty paying for day-to-day expenses.
With all things being said, bear in mind that these government insurance policies are low in cost because they only offer the most basic of coverage. Hence it is important that you also consider the following and more:
Do you prefer your coverage to be more extensive? (e.g. getting payouts for less severe disabilities or after being diagnosed with early-stage critical illness etc)
Do you prefer your coverage to stop upon retirement or upon death instead?
What will you be using to cover the balance shortfall of these basic payouts?
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