Should You Keep Your Dependent Protection Scheme (DPS)?

This month is one of the few times in the year whereby some PolicyHolders get the letter from our company to notify that their Dependent Protection Scheme or DPS is due for renewal and that they should make sure that their CPF-Ordinary and/or Special account still has sufficient fund to pay for the premiums.

The Issue With People Whom Understand The Plan

Sometimes I feel that Ignorance is Bliss is a better choice because after most PolicyHolders know what is the Dependent Protection Scheme all about, most of them decide to opt-up for the plan… citing the two common reasons like:

• Premium paid is down the drain
• Nothing will happen to me before age 60

Without ever considering the positive side – a low premium for a high sum assured or how useful this lump sum of money is to the family in times of need.

What Is Dependent Protection Scheme All About Then?

As cited from the CPF Board website, the Dependent Protection Scheme (DPS) is an affordable term insurance scheme, as compared to those offered commercially, that provides insured members and their families with some money to get through the first few years should the insured members become permanently incapacitated or pass away.

What Does It Cover?

DPS is an optional term insurance (which is why most will choose to opt-out) which covers CPF members for a maximum sum assured of $46,000 (not really capped at this amount as bonus sum assured will be added in later years – please do confirm this with your insurance company) up to age 60.  The coverage is worldwide.  The DPS benefit will be paid out if the insured member passes away or becomes permanently incapacitated such that he or she can no longer work.

How Did You Get Into This Plan?

You can get into this Plan as early as 16 years old when you make your first CPF contribution and this process is usually automatic. Once you are in, you will get a welcome package that consists of a Welcome Letter, An Opt-Out Form and a Change Insurer Form. So the moment you get into this plan, you already have a choice to opt-out.

In Simple Terms, the benefits of having a Dependent Protection Scheme are:

• Cheap and Affordable for Most Singaporeans
• Premiums do not need to come from Cash
• In terms of insurance coverage, you are covered against Death and Permanent Incapacitated (which is not the same as Total and Permanent Disability)

Which Brings Me To This Interesting Benefit – Permanent Incapacitated…

Frankly speaking, I was like the majority of the PolicyHolders who do not really see the need of having that Plan as I thought that the plan only covers me against Death and Total and Permanent Disability (TPD).

My impression changed when my Senior explained to me that the plan is rather unique because of the Permanent Incapacitated benefit. According to the definition is that incapacitated means to be lying ill and helpless which is different from the definition of TPD.

This benefit to me would mean that in terms of being able to claim because I am unable to work because of a permanent illness is easier as compared to be permanent disabled! You see how good this plan is!

The Simply Unexpected!

Talk about life being simply unexpected! As mentioned earlier on that most people would feel that nothing will ever happen to them before the age of 60, truth is… that’s not true! I had this personal experience whereby earlier in the day, one PolicyHolder came to told me about nothing will ever happen and later in the day, a family member (not related to the previous PolicyHolder) came to make a death claim for DPS for the Father who is before the age of 60!

Should You Keep Your Dependent Protection Scheme Plan Then?

My answer is a simply yes! Given the low premium involved, no cash needed (where most people will feel that cash is king), the significant insurance coverage given (though not necessarily high) can help the family members in times of need.