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For those who don’t already know, CareShield Life came into effect on 1 October 2020 to cover all Singapore Citizens and Permanent Residents (PRs) when they turn 30. When this happened, those between the age of 30 to 40 in 2020 (born between 1980 to 1990) were also automatically enrolled into CareShield Life.
Going forward, Singapore Citizens and PRs above the age of 40 as of 2020 (born in 1979 or earlier) have a choice of either continuing with their existing ElderShield or to opt for CareShield Life. Since neither ElderShield nor CareShield Life are compulsory for those born 1979 or earlier, they can choose not to be covered under either policy.
However, choosing not to be covered may not be a good idea particularly for older Singaporeans. This is because 1 in 2 healthy Singaporeans aged 65 could become severely disabled in their lifetime, and may need long-term care. Long-term care refers to personal and medical care that a person requires due to severe disability arising from old age or adverse health conditions. It is also estimated that around 3 in 10 could remain in severe disability for 10 years or more.
What Is CareShield Life & How It Provides Important Insurance Coverage?
Like its predecessor ElderShield, CareShield Life is a national disability income insurance scheme that aims to help Singaporeans and PRs cope with the cost of long-term care.
As defined by the Ministry of Health (MOH), the criteria for severe disability are when a person cannot independently perform at least 3 out of 6 Activities of Daily Living (ADLs). Whether you are on the previous ElderShield or the new CareShield Life, the criteria to qualify for the monthly long-term care payout is the same.
However, one key difference between ElderShield and CareShield Life is the monthly payout.
While ElderShield 400 provides a monthly payout of $400 for up to 6 years only, CareShield Life payouts start from $612 per month in 2021. Payouts also increase annually until age 67 or when a successful claim is made, whichever is earlier. Once a claim is made, the monthly payout will remain fixed for as long as the policyholder is severely disabled.
From 2021 to 2025, payouts will increase by 2% per year. Thereafter, payout increases and corresponding premium adjustments will be recommended by an independent CareShield Life Council.
While $612 is higher than $400, some of us may feel that this amount is sufficient for us or our loved ones if we suffer severe disability and require long-term care support. For example, based on our estimates, it will cost about $1,000 a month (inclusive of basic living expenses) to hire a foreign domestic worker in Singapore.
To provide for higher coverage, those insured under CareShield Life should consider the option of buying a supplement to enhance the level of long-term care coverage.
How CareShield Life Supplements Give Us Better Coverage
CareShield Life supplements are insurance plans offered by some private insurers that provide us with complimentary benefits on top of what CareShield Life provides. These may include 1) higher monthly payouts 2) enhancing your coverage by being able to make claims for 2 ADLs instead of 3 stipulated by CareShield Life and 3) additional lump-sum financial benefits for policyholders if they are assessed to be moderately or severely disabled.
To purchase a CareShield Life supplement plan, you first need to be enrolled under CareShield Life. Similar to ElderShield, you can choose to pay the premiums for CareShield Life supplements using your MediSave account, up to a maximum of $600 per year.
An example of a CareShield Life supplement is Care Secure by Income.
How Income’s Care Secure Works
Care Secure is provided by Income, one of 3 insurers offering CareShield Life supplement plans in Singapore, which allows you to enhance your CareShield Life coverage.
#1 Inability To Perform 2 ADLs (Instead Of 3) To Qualify For Monthly Payouts
During one of the focus group organised by the ElderShield Review Committee that I attended a few years ago, a key topic that was raised by participants was why ElderShield (and now CareShield Life) required policyholders to be unable to perform 3 ADLs before monthly payouts could commence. Some participants felt that was too stringent as criteria.
For example, a study published by the Academy of Medicine Singapore in 2014 shared that about 83,000 Singapore residents aged 60 and above will have at least 1 or more ADL limitations by 2030. Of this, about 47% are estimated to have 1 or 2 ADL limitations.
The good news is that for those of us who feel that 3 ADLs is too stringent, we have the option to start our payout earlier by getting a CareShield Life supplement such as Care Secure.
Care Secure monthly benefit will be activated once policyholders are unable to perform at least 2 out of the 6 ADLs. This allows policyholders who are moderately disabled to get monthly financial support earlier, as opposed to CareShield Life where support only kicks in when the individual is unable to perform 3 out of 6 ADLs.
#2 Choose Your Desired Monthly Payout
You can also choose the desired level of monthly benefit. Care Secure allows you to choose a monthly payout of between $1,200 to $5,000, in multiples of $100. Do note this amount is inclusive of any payout that is also given by CareShield Life, if you qualify.
For example, if you choose a disability benefit of $2,000 and are unable to perform at least 3 out of 6 ADLs, you will receive a monthly benefit of $2,000 (inclusive of your CareShield Life benefit), as opposed to $612 which is what CareShield Life will pay you if you start claiming in 2021. However, even if you are unable to perform 2 of the 6 ADLs, the full $2,000 will be paid by Care Secure.
#3 Additional Support Benefit, Dependant Benefit & Death Benefit
Support Benefit: Besides providing you with financial support if you are unable to perform 2 ADLs and letting you choose your desired level of monthly benefits, Care Secure also provides a support benefit of up to 600% of the disability benefits. For example, an individual covered for a monthly disability benefit of $1,500 will receive a support benefit payout of 300% of the disability benefit ($4,500) if they are unable to perform 2 ADLs, and 600% of the disability benefit ($9,000) if they are unable to perform 3 ADLs.
Dependant Benefit: If you are disabled and have dependents, you will receive 25% of the disability benefit as a dependant benefit every month for up to 36 months in a lifetime. For example, an individual with a monthly disability benefit of $1,800 will receive an additional $450 a month, or $16,200 in total over 36 months.
Death Benefit: For policyholders who are already claiming under Care Secure, there will be a death benefit payout of 300% of the disability benefit. An individual with a monthly disability benefit of $1,800 will receive a death benefit of $5,400.
The additional benefits provided by Care Secure is a recognition that beyond just the primary costs incurred for long-term care (e.g. having to hire a foreign domestic worker), there are also other costs that a family may incur when a household member suffers from moderate or severe disability.
With an ageing population in Singapore and a life expectancy of 83.6 years as of 2019, severe disability is an area that we cannot afford to neglect, both as a nation and as individuals.
While CareShield Life provides a basic level of coverage against severe disability, the coverage amount is also sized such that the premiums are affordable for the entire population. However, some people may feel that $612 a month will not be enough, or that the criteria of needing to have 3 out of 6 ADLs is too strict. This is where a CareShield Life supplement like Care Secure will come in handy.
For all Singaporeans who are born in 1980 or later, you will automatically be enrolled under CareShield Life once you turn 30, or have the option to enroll into it if you are 41 and above (as of 2020).
You can also take a step further to decide if you want to get a CareShield Life supplement like Care Secure to increase your total coverage against moderate and severe disability.
All opinions expressed in this article are solely those of DollarsAndSense.sg and do not reflect the opinions of NTUC Income Insurance Co-operative Limited (“Income”). Income is not responsible nor liable to any party in any manner whatsoever for such opinions, and DollarsAndSense.sg is solely responsible for any opinion and the accuracy and completeness of any information and intellectual property used in this article. The information contained in this article is provided and meant for general information only and do not constitute an offer, recommendation, solicitation or advice by Income or DollarsAndSense.sg to buy or sell any product(s) or investment product(s). It is not and should not be relied on as financial advice and has no regards for any person’s investment and financial needs. If you are unsure whether this plan is suitable for you, you may seek personalised financial advice from a qualified insurance advisor. Otherwise, you may end up buying a plan that does not meet your expectations or needs. As a result, you may not be able to afford the premiums or get the insurance protection you want. Precise terms, conditions and exclusions of the product are found in the policy contract.
For customised advice to suit your specific needs, consult an Income insurance advisor.
Protected up to specified limits by SDIC (applicable for Income products that fall under the Policy Owners’ Protection Scheme).
Information is correct as of 4 May 2021.