What is CareShield Life and Why Should You "Upsize" It with Private Insurers?
Before we go into the main topic proper, let's first look at a set of statistics:
- According to MOH prediction, 1 in every 2 healthy Singaporeans aged 65 could become severely disabled in their lifetime.
- Claims stats by Aviva shows stroke, cancer and degenerative diseases to be the top 3 causes of severe disability.
- Based on MOH estimates, the median duration that Singaporeans could remain in severe disability is 4 years, and 3 in 10 could suffer for 10 years or more.
- A study by Aviva estimates that people with severe disability would need an average of $2,324 per month to cover daily living expenses, care-giver costs, medications, etc.
By "severe disability", we mean the inability to independently perform at least 3 of the following 6 Activities of Daily Living (ADL).
What is CareShield Life?
In short, CareShield Life a lifetime disability income insurance for all Singaporeans and PRs over the age of 30. Those covered under the scheme will start to receive monthly payouts onced diagnosed to be "severely disabled" (i.e. unable to do at least 3 ADLs). The payout continues as long as the person remains in the severely disabled state, or till his/her death.
To relieve financial burden, CareShield Life premiums are fully payable by one's own Medisave, or that of family members'
CareShield Life is an enhancement from the ElderShield scheme, which has been in place since 2002. The table below illustrates how they differ.
CareShield Life is an enhancement from the ElderShield scheme, which has been in place since 2002. The table below illustrates how they differ.
CareShield Life also has different rules of admission for people in different age groups. Specifically, all those born in 1980 or after will join (or would have joined) the scheme either on 1st Oct 2020 or when they turn 30, whichever is later. People in this group will be enrolled even if they were already severely disabled before age 30. Membership is compulsory.
Meanwhile, people born in 1979 or earlier have a choice whether to join CareShield Life or not. They could start to opt in from end-2021 onwards. However, those already with severe disability will be excluded but could still benefit from other government subsidies.
What are CareShield Life Supplements?
As CareShield Life came into effect, some local insurers have also launched products known as CareShield Life supplements. These products allow people to "upsize" their basic CareShield Life coverage based on individual needs, such as increasing the monthly payout, easing the claims criteria, and providing additional benefits.
Buying a supplement product on top of CareShield Life is very similar to upgrading our basic MediShield Life to an Integrated Shield Plan with a private insurer. The goals are both to enhance what the government provides.
There are several reasons why we think EVERYONE SHOULD enhance CareShield Life with supplements.
No 1. The coverage from CareShield Life is simply not enough.
The monthly payout from CareShield Life in the event of severe disability is only $600 in 2020. This is hardly enough just for food and utilities, not to mention other big-ticket items such as engaging a caregiver, medical treatments, as well as the effect of inflation.
Even with an annual increment of 2%, the montly payout will only become $1,324.82 in 2060. Unless you already have a lot of liquidable assets or there is someone you can rely on paying all your expenses, or you are super confident that disabilities will never happen to you, topping up your monthly payout on CareShield Life is a necessity.
No 2. The supplement products are (in most cases) damn worth it!
What you can gain from supplement products are usually far more than the premiums you pay.
Take Aviva's product for a simple calculation. Assume a 30-year-old male Singaporean buys the plan to receive an additional $1500 per month in case of severe disability. The yearly premium works out to be only $573.95, or roughly $48 per month, which is less than 1/30 of what he could receive if something happens.
No 3. You can use your Medisave money to pay the premiums.
You are allowed to use up to $600 per year to pay for the supplement plan's premiums.
As most of us know, our monies in Medisave are forever locked inside unless we use it to pay for medical expenses or CPF-approved health insurance products.
If severe disability really strikes, your savings in Medisave likely would be used up quite fast. Doesn't it make much more sense to use a small portion of it to get an insurance, such that you will have a long-lasting stream of income when you really need it the most?
CareShield Life Supplement Products Compared
At present, 3 insurers have been permitted by CPF board and launched CareShield Life supplement products. The 3 companies are Aviva, NTUC Income and Great Eastern. Here we choose the most comprehensive plans from each company for a detailed comparison.
On first look, it seems that NTUC Income's product is the cheapest. However, beware that Income actually only pays you the balance between your selected monthly payout and what CareShield Life is already paying you, when you cannot do 3 ADLs. In comparison, Aviva and Great Eastern will just pay you whatever amount you selected on top of CareShield Life.
As a result, what you are getting from Income might actually be much less than what you initially expected. And the older you are when you make the claim, the less it will be.
Out of the other two insurers, Aviva's product seems to be the better deal as it contains much more benefits than what Great Eastern offers, while the premiums are about the same.
That's pretty much all the essence you need to know about CareShield Life and supplements! If you would like to customize a plan for yourself, please leave a comment on our blog or PM us on Facebook. We will get back to you as soon as possible :)
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