For many Singaporean guys, their first experience with insurance is during National Service (NS). Under the Core Scheme, all full-time national servicemen (NSF) enjoy coverage under the SAF group insurance, paid for by MINDEF and MHA.
But what happens after their Operationally Ready Date (ORD)? Should these fine young men fresh from NS opt to pay for continued protection under the Voluntary Scheme? fundMyLife is fond of financial questions and recently we are seeing an increasing number of questions about this scheme. Let’s take a quick look at the plan to see what you could be insured against.
Group Term Life – Death or Total and Permanent Disability
As the name suggests, the Group Term Life covers death, total and permanent disability, advance payment benefit, and daily hospital cash benefit daily for 11th–30th day of hospitalisation.
How much is it? Here’s one of the biggest draws for the plan – the price. When you’re 65 years old and below, you can be insured for $100,000 for $4.10/month and $1,000,000 for $41/month. How awesome is that?
However, the plan is much more expensive between 65 to 70 years old and you don’t get insured after that 70. In the case for $100,000 coverage, the premium jumps from $4.10/month to $70.90/month upon renewal when you’re 66 years old and $1,060/month when you are 70 years old.
Group Personal Accident
The second main plan covers you for accidental injuries, and deaths resulting from accidents. You can be insured for $100,000 for $1/month all the way to $600,000 for $6/month. That said, even though the plan does cover fractures, the limit is $5,000. It’s less for some body parts, where it’s 25% of $5,000 for an arm fracture and 50% for a leg fracture for example.
In addition, as with all TPDs, the requirements to qualify for TPD are very specific – you’d have to lose very specific parts of your body in order to qualify for the claim. It depends if you’re working in an occupation that can lead to such disabilities. Working in a factory with heavy machinery, yes; office work, probably not.
On top of the two main plans mentioned above, you can also add riders to either for critical illnesses, early critical illnesses, disability income, and/or outpatient Medicare.
On top of the Group Term Life Insurance, you can add a rider that covers critical illnesses using Living Care. Living Care’s cost increases as you age. We will spare you the numbers, but we observe a marked jump in premiums after the age of 45. To illustrate this, we plotted the percentage increase of premiums from one age group to another.
This chart that illustrates the difference of premiums between age groups. The values indicate the difference between adjacent age groups. For example, there is a 16% increase in premiums between the 21-25 y/o age group and 1-20 y/o age group.
That said, as a basic critical illness rider it’s as good as it gets since it covers the 37 critical illnesses out there. You might as well think of getting if you’re getting either of the main plans.
Living Care Plus covers early critical illnesses, but it’s relatively paltry since it covers 10 early critical illnesses compared to other insurers out there. It’s cheaper, but it covers less. In this case, it’s a matter of whether you can afford early critical ilness plans by other insurers out there.
Disability Income is a rider that covers 50% of your basic salary x 12 upon disability, to a maximum of $120,000/year till you’re 70 years old. It’s relatively lower than the usual 75% offered by other insurance companies, but the premiums are relatively lower as well. The premium depends on your age, e.g., $4.13/month/$10,000 sum insured when you’re under 26 years old. Again, like the main plans, it really depends on your occupation and lifestyle.
Outpatient Medicare is a rider that provides coverage for GP consultation expenses. It has two plans: Plan A (Superior) and Plan B (Deluxe) that covers a maximum of $1,000 and $500 per policy year respectively. The premiums depend on age, but is relatively simple. Plan A ranges from $296-376/year and Plan B ranges from $208-260/year.
Things to look out for
So cheap, so affordable! Does the suite of plans sound too good to be true? Well, yes and no. There are certain caveats to be mindful of if you choose this plan.
Firstly, as the name suggests, it is a group insurance plan. It means you don’t truly own the policy and you would lose it when you’re either kicked out or the group disbands. Fortunately, the probability of MINDEF, MHA, or SAF disbanding is highly unlikely. However, it doesn’t mean SAF might not switch the insurer from Aviva to another company and that the terms and conditions won’t change suddenly.
Secondly, while the premiums are relatively low, the premiums are not guaranteed and increases with age for some of protection areas. Moreover, as a term insurance, the coverage is until you are 70 years old – what happens after then?
The average lifespan of a Singaporean is 82 years, which means you still need something to fill in the 12-year gap in between. The SAF plan can be an initial part of your portfolio when life is simpler, until when it makes more sense to get a proper insurance plan on top of it as you enter different life stages that requires more, or whole life protection.
Still feeling uncertain?
Unsure if you have enough cover at your age, or wondering if you need anything to complement your SAF insurance? We can definitely help you get some answers. Head on over to our site, ask them, and be connected to the right financial advisers who can answer them!
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