While most people know that we can pay for our home loans with our CPF monies, there are other ways we can use our CPF monies, including education and (selected) insurance policies. CPF is primarily a retirement scheme for Singaporeans and its usage is limited to ensure that Singaporeans are saving adequately for retirement. However, there are some insurance policies that the government has deemed important enough to allow the use of CPF monies.
Here are the 5 essential insurance policies Singaporeans can pay using our CPF monies.
With MediSave being a component of our CPF account set aside specifically for healthcare, it’s no surprise that we can use CPF monies for health insurance policies. We can use our MediSave 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. This is hospitalisation and surgery insurance that protects Singaporeans against large hospital bills and 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 for their MediShield Life premiums fully using their CPF Account through their MediSave.
Under the Private Medical Insurance Scheme, Singaporeans can also use MediSave buy Integrated Shield Plans (IPs) for ourselves and our family members (parents, spouse, children, grandparents and siblings). These IPs provide additional private insurance coverage on top of what is provided by MediShield Life.
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). Taking the example of the insurance premiums of NTUC Income’s IP – Enhanced Income Shield, we can see that once we reach the age of 36 to 40 and 46 and above, we can expect that we would need to fork out additional cash to pay for the highest level of private insurance coverage (which cover private hospital admissions).
Standard insurance premiums for Enhanced IncomeShield. Source: NTUC Income
However, we cannot use MediSave to pay for riders for IPs. These will have to paid from our own pockets and not from our CPF account.
#2 Disability Insurance – CareShield Life / ElderShield And Supplements
CareShield Life is a long-term care insurance scheme that provides basic 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 fully using MediSave.
On top of 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 our MediSave to pay for our family members, up to the same limit.
Aside from the mandatory healthcare insurance plans, CPF members can also use our CPF monies 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 if we have not opted-out of the scheme, we are automatically enrolled. As it is not compulsory, we can also choose to terminate this coverage.
DPS covers insured members for a maximum sum assured of $46,000 up to 60 years old. From 1 April 2021, DPS will cover insured members up to 65 years old. Members up to 60 years old will be covered 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 fully 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.
#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 are using 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 of the flat, the type of loan (concessionary or market rate) and the age and gender of the member.
According to the HPS premium calculator, a male aged 35 years old taking a concessionary loan of $400,000 with a loan tenure of 25 years would expect to pay $384 a year in HPS premiums.
The premiums for 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.
#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 they are 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, Retirement Account (RA) will be created for us. This will be in addition to our ordinary Account (OA), Special Account (SA) and MediSave Account. Concurrently, 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 full 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.
This article was originally published on 9 March 2021 and updated with new information.
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