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?
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.
How About ElderShield?
When you buy any life insurance plan, the basic benefits are that you are covered against Death and Total and Permanent Disability. So do you what does this insurance term – Total and Permanent Disability – mean to you?
The General Definition of Total And Permanent Disability (TPD)
It would practically mean that the loss of a pair of limbs (inclusive of eye sight) and being unable to work continuously for six month and thereafter. This, of course, must be certified by a certified Medical Practitioner. If the definition here differs from what you should know, please do refer to the Product Summary of your life insurance and it’ll be explained there.
The General Exclusion For Total And Permanent Disability
Do you know that, in Singapore, the coverage for TPD will cease the moment you have reached 65 years old whereas the rest of the coverage like Death or against the 30 Critical Illnesses will still continue.
So Is Having The Coverage For TPD Important?
Life is full of uncertainty and you’ll never know when such an unforeseen circumstance like a stroke will hit you to be permanently disabled – you lose your job permanently, loss of income for your family, you are very much alive and there’ll be a definite financial difficulties as long as you are alive.
Therefore, having a coverage for TPD (some insurance companies will pay a lump sum whereas others may pay a certain limit per month or per year) is beneficial in making sure that you have enough financial assistance to take good care of yourself while you are down.
So Why Does Total And Permanent Disability Cease To Continue After Age 65?
This is a very good question that I, myself, do not have an accurate answer. In my personal opinion (I may be wrong) is that, the health risk for people to have Stroke or Alzheimer’s Disease (Total and Permanently Disabled) is tremendously high, which could have a serious financial impact on insurance companies to sustain this risk. Therefore they decide to have this general clause of having it till age 65.
Stroke And Alzheimer’s Disease Are On The Rise, So How Do I Get Myself Covered After Age 65?
The ElderShield Plan
If you are concerned about getting covered after the age of 65, there is an initiative taken by the CPF Board to help take care of Singaporeans in terms of severe disability, that is the Eldershield Plan, which is offered automatically to Singaporeans and PRs who are CPF members and have turned 40 years old.