Your initial thought when you first discovered ElderShield might have been, “Elder? Who, me?” – especially if you happen to be born in the 1960s, or 1970s.
Or that the notification letter from one of the approved insurers administering ElderShield must have been a mistake – or at least vastly premature.
Your eyes might even have glazed over when your insurance agent or financial planner mentioned this seemingly irrelevant scheme to you when you were in your late 30s.
In a sense, it is understandable; whomever you ask, around the world, 40 – the age at which you first become eligible for ElderShield insurance – doesn’t immediately connote ‘elderly’ or ‘elder’. In fact, 50 or 55 might be a more reasonable qualifying age for a scheme with such a name.
The confusion (and perhaps hurt feelings) of 40-somethings notwithstanding, ElderShield is an important pillar in one’s financial planning. In fact, I regard it as one of the bare necessities of life insurance – once you’ve arrived at the big 4-0.
What is ElderShield?
ElderShield is a national disability insurance scheme for those 40 and above. It offers a monthly cash benefit of $300 or $400 for 60 or 72 months respectively (depending on version of scheme one is covered under) to cover costs incurred in caring for the severely disabled.
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This insurance can be enhanced, for higher cash benefit up to lifetime coverage, through ElderShield supplementary plans offered by private insurers. You may largely finance ElderShield and its supplements through CPF if you have sufficient Medisave funds, or top up with cash for higher levels of coverage.
Why is it relevant to me? I’m still young!
While it is true that serious illness, statistically speaking, is not very likely to afflict the average person in his or her 40s, ElderShield premiums are determined by entry age – at age 40, basic ElderShield today costs just around $200 (rates for males are lower) in annual premium.
This premium rate will not change, and will apply for the duration of coverage. By comparison, the premiums for ElderShield supplements are not guaranteed; however, they are also more affordable the lower your entry age is.
With life expectancy in Singapore very high at age 80 for males and 85 for females, an ElderShield member would, in all likelihood, be guarding against high costs that may arise from severe disability care needed during the golden years – into one’s 60s, 70s and 80s.
For a sobering thought, one of the private insurers revealed a few years ago that 70% of its ElderShield claims came from those aged under 55 – an unexpectedly high statistic that goes against conventional wisdom.
You can choose to opt out, but reasons not to include:
- No need to apply in the first place – CPF members with Medisave accounts are automatically included at age 40, no hassle and no fuss.
- Ease of acceptance – there is no medical underwriting, except for those already disabled (auto-coverage extended even to those disabled to the point of being unable to perform up to 2 activities of daily living).
- Affordable premiums – by not opting out of basic ElderShield, and considering the purchase of an ElderShield supplementary insurance plan, one would be looking at rather affordable annual premiums for significant monthly cash benefit in the event of severe disablement.
- Protection from a ‘young’ age – even if severe disability should occur prematurely, say in one’s 40s or 50s, ElderShield and its supplement would apply. If you signed up for lifetime benefit, this would provide a vital and considerable safety net, for as long as it’s required.
- If you do opt out, the benefits stated above – ease of acceptance, lower premiums, early protection – may not necessarily apply should you decide to re-enter the scheme later on. Plus, you would need to make alternative long-term care plans that can adequately cover severe disability.
So even if the ‘Elder’ in ‘ElderShield’ may seem odd to you, it is well worth discussing the suitability of ElderShield and ElderShield supplements for you with your financial advisory professional.