A Reader has recently submitted these following questions (some of these have been edited for the purpose of this blog post) about the Dependants’ Protection… Read More »My Responses To The Questions On The Dependants’ Protection Scheme (DPS) And Eldershield
I have been asked a few times on whether there’s a need to cancel all insurance policies when one decides to work overseas a few… Read More »Do You Need To Cancel Your Insurance Policies When Overseas Or Migrated?
It was two days ago that I received an email comment on one of my earlier posts on the topic of Dependants’ Protection Scheme (DPS) and in it I was asked to provide some advice on why a passed-on family member may not be covered by DPS when it’s obvious that there’s enough CPF money in the account…. and there’s been so much confusion/unhappiness that the family is wondering if they are still able to make claims from it and if so… how can they do so…
What Is Dependants’ Protection Scheme Or DPS?
(As quoted from the CPF Board website) The Dependants’ Protection Scheme (DPS) is an affordable term insurance scheme 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.
And for most of its members, they use the money in their CPF-OA account to service the yearly premium. The deduction is usually set to automatic but there’s the usual yearly reminder that the annual premium is due and pending for deduction at a certain date. Insured members are also reminded to make sure that there’s enough money left in the CPF-OA for premium deductions…
If there’s really the case whereby the insured member has no enough money in the CPF-OA account, there will be a letter that’s being sent to notify about the lack of funds and also the alternative to top up the difference with cash at one of the designated Insurance Companies.
Should the insured member forget to make the payment after the grace period, the DPS plan will usually be terminated and an official letter will normally be mailed out to notify as well…
So Why Is It Important To Understand What’s Mentioned Above For DPS?
I would like to express my heart-felt sympathies to the two families (one of the family I do know personally) for the loss of their precious child (one is at the 30s and the other is just 22)
The Family That I Know Personally…
I know the child (younger than me by 7 years) and the child is one of those who is very quiet and also happened to be the only child of the family. I used to be one of the bouncing-around kid in the neighborhood and this child captured my attention was that it was hard to get the child to play and mingle with us…
As usual, we all grew up and went on with our personal life. Those were the times. And it’s only upon reading the newspaper that I got to know the news. This child has grew up to be independent, smart, diligent and has gotten a place in a local university and in a good course.
As a parent, which I place myself in their position, will definitely be proud and one fine day would depend on the child to take care of them upon graduation. I believe this is how my mum would have felt when I graduated with a degree – though she is no longer around to see that. Rest in peace Mum! You deserve it!
To continue… How would it have felt when suddenly the world turns against you. With all the hopes pinned on the child, a sudden collapse meant the end of everything. A bright future. Gone. A world to see and explore. Gone. The dependence… it’s gone as well.
How would you have felt… if the same should happen and I do not wish for the same to happen to anybody…
At this moment, I would like to share that time is precious. Any moment is precious. If you have somebody that’s close to you, start to pay more attention to them. If you have been busy with work, learn to take a break and spend quality time with your closed ones. Show your love. Show that you care. Do not wait too long to do that!
Okay. At this point of your reading, I would also like to share the importance of life insurance as well. If you are not ready, I would welcome you to return next time for my other posts. Else, I welcome you to explore how life insurance can help.
The Importance Of Life Insurance…
(All About Life Insurance Related – Whole Life, Term and Group Term)
This post and the continuous ones will form the basis of all the past and current insurance plans out in the market and I hope this will give you a better understanding of the structure of plans that you may have in your current portfolio.
Note: there are many different variations of plans and if you do not see it, it would be best to seek your Financial Planner with regards to it. It’s better to understand now then to have issues (in terms of claiming or maturity). Do not be shy about asking! Thanks!
Here Goes The List:
1. Traditional Whole Life Insurance Plans
This is a plan that usually covers against Death, Total and Permanent Disability (TPD) and the 26 (now change to 30) Critical Illnesses (CI). This plan pays a lump sum upon claim and will terminate. Premiums to be paid are usually to the age 85 (this may varies) and comes with cash value. Some insurance companies offer the options to convert part or full amount of the surrender value to an Annuity Plan. Do note that this plan does not cover you against any hospitalization bills. Also note that early termination will result in heavy penalty (getting less than what you have paid)
2. Limited Premium Term Whole Life Insurance Plans
This is a new variation to the Traditional Whole Life Insurance Plan by offering you with a Limited Premium Term. This means that you do not have to serve the full premium term to 85 years old. You are given some options like 5, 10, 15, 20, 25 and to age 65. The benefits are the same as per the Traditional Whole Life and pays a lump sum upon claim and terminates.
1. If I do not die, be permanently incapacitated before the age of 60 (for the case of DPS) or unable to commit to at least 3 out of the daily 6 activities (for the case of Eldershield), the total premiums paid by me are down the drain
2. I do not know what these plans are all about.
And when unforeseen circumstances do happen, some of the fingers are actually pointing to the insurance companies for not doing their best to ask the Policy Holders to keep the plan or that the plan was terminated without the Policy Holders’ acknowledgement (they do happen!)
Then there will be a tough time asking for the revival of the plans… asking for leniency and such…
The Premiums Paid Is Just A Small Price…
Let’s calculate the total premiums paid when you first get in (entry age is 16 if you do make your first CPF contribution) to age 60:
- Age 16 – 34, $36 per year, a total of 19 x $36 = $684
- Age 35 – 39, $48 per year, a total of 5 x $48 = $240
- Age 40 – 44, $84 per year, a total of 5 x $84 = $420
- Age 45 – 49, $144 per year, a total of 5 x $144 = $720
- Age 50 – 54, $228 per year, a total of 5 x $228 = $1140
- Age 55- 60, $260 per year, a total of 5 x $260 = $1300
Making a total premiums paid of $4504 during a duration of 45 years, an average of $100 per year, $8.33 per month, $0.28 per day but covering you for a lump sum $46,000 (not including the bonuses). And should anything happen meanwhile, the return-fold is 46,000/100 = 460 times instantly.