Most people are aware that CPF funds can be used to pay for home loans. However, CPF savings can also be used for other purposes, such as education and select insurance policies.
CPF is primarily a retirement savings scheme for Singaporeans, with strict guidelines to ensure individuals save sufficiently for retirement. Despite this, the government allows CPF funds to be used for certain insurance policies that are considered essential.
Here are the 5 essential insurance policies Singaporeans can pay using our CPF monies.
Read Also: 12 Little-Known Things About CPF That Most Singaporeans Are Still Unaware About
Since MediSave is a component of our CPF account dedicated to healthcare, it’s no surprise that CPF funds can be used for health insurance policies. Specifically, MediSave can be used to pay for two government-mandated health insurance plans: MediShield Life and CareShield Life.
#1 Hospitalisation and Surgery Insurance – MediShield Life And Private Medical Insurance Scheme
MediShield Life is a mandatory health insurance plan for all Singapore Citizens and Permanent Residents. It provides coverage for hospitalisation and surgery, protecting Singaporeans from large medical bills. Its coverage extends beyond acute hospital care and is periodically reviewed by the Ministry of Health to ensure that Singaporeans are adequately protected.
Singaporeans can pay their MediShield Life premiums entirely using their CPF Account through their MediSave.
Read Also: Beginner’s Guide To Understanding How MediShield Life Works
Under the Private Medical Insurance Scheme, Singaporeans can also use MediSave to buy Integrated Shield Plans (IPs) for themselves and their family members (parents, spouse, children, grandparents and siblings). These IPs provide additional private insurance coverage on top of what MediShield Life provides
The MediSave usage is subject to the Additional Withdrawal Limits (AWLs), which caps the amount of MediSave that can be used to pay for the additional premiums of the private insurance component of IPs. The AWLs apply on top of the amount of MediSave used for MediShield Life premiums:
- $300 if you are 40 years old or younger on your next birthday.
- $600 if you are 41 to 70 years old on your next birthday.
- $900 if you are 71 years or older on your next birthday.
MediSave can be used to pay fully for the MediShield Life component and partially for the private insurance coverage (depending on age, premium and AWLs). However, we cannot use MediSave to pay for riders for IPs.
Read Also: Complete Guide To Buying A Private Integrated Shield Plan
#2 Disability Insurance – CareShield Life / ElderShield And Supplements
CareShield Life is a long-term care insurance scheme that provides essential financial support and lifetime coverage to Singaporeans in the event of severe disability, especially during old age, and who require personal and medical care for an extended duration (i.e. long-term care).
Older Singaporeans may be covered under ElderShield, which is still in force as a severe disability insurance scheme that provides a monthly cash payout for up to 72 months to help pay out-of-pocket expenses for the care of severely disabled persons.
Singaporeans can pay for their CareShield Life or ElderShield premiums entirely using MediSave.
Read Also: CareShield Life Vs ElderShield: Understanding The Differences Between These Two Policies
In addition to the basic CareShield Life or ElderShield coverage, we can also choose to buy additional private insurance coverage, also known as supplements. The premiums of these CareShield Life or ElderShield Supplements can be paid using MediSave, up to a limit of $600 a year per insured person. We can also use MediSave to pay for our family members, up to the same limit.
Read Also: Complete Guide To Buying A CareShield Life Supplement Plan
In addition to the mandatory healthcare insurance plans, CPF members can use their CPF funds to pay for two other insurance plans.
#3 Term Life Insurance – Dependants’ Protection Scheme (DPS)
The Dependants’ Protection Scheme is an opt-out term life insurance plan for CPF members. The opt-out nature means that we are automatically enrolled if we have not opted-out of the scheme. As it is not compulsory, we can terminate this coverage.
DPS covers insured members up to 60 years old for a maximum sum assured of $46,000. From 1 April 2021, DPS will cover insured members up to 65 years old for a maximum sum assured of $70,000. For members above age 60 and up to age 65, DPS covers them up to a maximum sum assured of $55,000.
The premiums for DPS can be paid entirely with CPF monies using funds from our Ordinary Account (OA). If there are insufficient funds in our OA, the premiums will be deducted from our Special Account. There is no cash outlay unless we have insufficient CPF funds, or have chosen to pay the full premium by cash.
TDPS is currently solely administered by Great Eastern Life.
Read Also: Complete Guide To Understanding CPF’s Dependants’ Protection Scheme (DPS)
#4 Mortgage Insurance – Home Protection Scheme (HPS)
The Home Protection Scheme is a mortgage reducing insurance that protects members and their families against losing their HDB flat in the event of death, terminal illness or total permanent disability.
This is compulsory if we use our CPF savings to pay for our monthly housing loan instalments on our HDB flat unless we qualify for an exemption.
The HPS premium is calculated based on the outstanding housing loan on the flat, the loan repayment period, the type of loan (concessionary or market rate), and the member’s age and gender.
According to the HPS premium calculator, a 35-year-old male taking a concessionary loan of $500,000 with a loan tenure of 25 years would expect to pay $460 a year in HPS premiums if he wants to purchase 100% coverage.
The premiums for the Home Protection Scheme can be fully paid using our CPF Ordinary Account. The deductions for HPS take priority over our housing loan instalment. If we have insufficient funds, the co-owners of our flat can also be authorised to use their OA savings to pay for the premiums.
Read Also: Understanding How The CPF Home Protection Scheme Works
#5 Annuity Insurance – CPF LIFE
CPF LIFE is short for CPF Lifelong Income For the Elderly. Administered by the government, CPF LIFE is a life annuity scheme providing Singapore Citizens (SCs) and Permanent Residents (PRs) the security of a monthly payout for their lifetime. All SCs and PRs are automatically included under this annuity insurance or covered under the Retirement Sum Scheme, which is the predecessor of CPF LIFE.
You may be exempted from CPF LIFE if you have a pension or a private annuity plan that pays the same or higher monthly payouts than CPF LIFE. Given that CPF LIFE offers one of the highest, if not the highest, payout rates available on the market today, this may be a tall order to fulfill without tapping on multiple private annuity plans.
For SCs and PRs, when we turn 55, a Retirement Account (RA) will be created for us. Savings from our OA and our SA will be transferred to our RA, up to the Full Retirement Sum (FRS). When we turn 65, our RA savings will be deducted and used as our CPF LIFE premium. We can either choose to start payouts at 65 or defer it up to the age of 70. Based on this premium amount (and any future contributions we make to the premium), we will receive monthly CPF LIFE payouts for the rest of our life.
Read Also: What Happens To The Interest On Your CPF Balances After Setting Aside Your Retirement Sum At 55?
This article was originally published on 9 March 2021 and updated with new information.
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