You may have read about CareShield Life, a new insurance scheme for severe disability and long-term care, which will be replacing the existing ElderShield scheme. In case you missed it, here’s the recap. CareShield Life will feature higher payouts and it will be mandatory for all Singaporeans and Permanent Residents aged 30 and above. This has led sceptics to label it as the government’s plot to make money.
But we can’t escape the fact that we live in a fast-greying population with more Singaporeans likely to need long-term care as they age. Insurance, along with personal or family savings and government subsidies (if you qualify for them) will form the basis of your long-term care expenses. And if you don’t qualify for subsidies and don’t want to dip into your savings, insurance may be your best bet for managing long-term care costs. As with all things new, there may be things about CareShield Life you’re unsure of.
So, here, Calvin Lawi, an Aviva Relationship Consultant who specialises in MyCare and MyCare Plus, which are Aviva’s supplements for ElderShield, answers the most frequently asked questions about this new scheme.
Why should I care that it’s replacing ElderShield?
As long as you’re a Singaporean or a Singapore permanent resident, you should care.
CareShield Life will automatically cover those aged 30 to 40 in 2020, and subsequent cohorts will join the scheme upon turning 30.
For the existing cohort insured under ElderShield scheme, you will be automatically covered by CareShield Life from mid-2021 if you are born between 1970 and 1979. Those born in 1979 or earlier can choose to join CareShield Life from mid-2021, if you are not severely disabled.
Key differences between CareShield Life and ElderShield
|Universal coverage for individuals aged 30 and above.||Optional coverage for individuals aged 40 and above.|
|The premium will increase by 2% annually for the first 5 years, after which adjustments to the rate of increase will be reviewed regularly.||The premium stays constant throughout the policy term.|
|The monthly payout, which is higher than ElderShield, increases yearly till age 67 or until the first payout is made.||The monthly payout stays constant throughout the policy term.|
|If the policyholder is severely disabled, it offers payouts for a lifetime.||If the policyholder is severely disabled, it offers payouts up to 60 or 72 months.|
I’m already an ElderShield policyholder. How will this change affect me?
If you’re an existing ElderShield policyholder born in 1970-1979, you’ll be automatically enrolled into CareShield Life in 2021 with the option to opt out by 31 December 2023.
Your ElderShield coverage, along with any supplements, won’t be affected if you choose not to upgrade to CareShield Life. So, you’ll continue to be covered.
Should I cancel my ElderShield policy before CareShield Life is launched?
Cancelling your ElderShield policy now would leave you with a protection gap. We would recommend you to consider cancelling your long-term care plan only after CareShield Life is launched.
How do I calculate the coverage I need?
First, look at your potential long-term care expenses. Factor in things like caregiver costs, daily-living aids such as a wheelchair, medication, home modifications, rehabilitation therapy, special diet, and transportation for your check-ups and therapy sessions.
Some of these are one-off expenses, like home modifications and living aids, while others, like hiring a domestic helper, medicine and therapy, are recurring costs.
Why should I enhance my ElderShield/CareShield Life scheme?
Simply because the ElderShield/CareShield Life payout alone is unlikely to cover all your potential long-term care expenses and inflation. According to Aviva’s Long Term Care Study 2018, here’s what the costs could look like today:
Depending on the scheme they’re on, most policyholders would receive a monthly payout of S$300 for up to 60 months or S$400 for up to 72 months under the ElderShield schemes. The payout amount for CareShield Life policyholders will vary with the time of claim. For e.g. a claimant who becomes severely disabled in year 2020 would receive S$600 monthly. The payouts increases over time until age 67, or when a claim is made, whichever is earlier. This figure will increase annually to help manage the inflation.
With both schemes, you can get purchase supplementary plans from private insurers for a better protection cushion.
I already have a Total and Permanent Disability rider with my life insurance. Do I still need ElderShield or CareShield Life?
Depending on your needs, ElderShield and CareShield Life may be an option for you to consider.
Total and Permanent Disability (TPD) coverage is claimable only if you’re permanently disabled. A one-time lump-sum payout is given. On the other hand, long-term care insurance provides coverage if you’re unable to independently perform at least 3 of the 6 Activities of Daily Living or ADLs (Washing, Feeding, Dressing, Moving Around, Transferring, and Toileting). Even if your disability is temporary, you’ll get a monthly payout from your long-term care plan.
Is it advisable to have both ElderShield and CareShield?
You can only have one of the two plans. But there are other ways to have greater coverage. If you’re an ElderShield policyholder, for instance, you can get supplements from private insurers. Depending on what you choose, these could increase your monthly payout, extend your payout duration, and give you payouts earlier (ie, allowing you to claim with just 2 ADLs instead of 3).
Why should I enhance my protection now and not in the future?
The pricing for enhancements would vary based on your entry age. Pre-existing conditions may also limit your coverage or mean paying more for your coverage. So, get it while you’re young and healthy.
What else should I consider when planning for my long-term care protection?
Be mindful of the importance of long-term care protection. Many people may look at the relatively low claims rate and may think that there’s no urgency to get this coverage. Or, maybe the numbers would give the impression that this is a difficult plan to make a claim for.
However, the low claim figures may be reflection that our population is relatively young. While severe disability does happen to younger individuals, prevalence is higher among older folks. In 10 or 20 years when the population enters a phase of rapid ageing, the numbers may be quite different.