CareShield Life: affordable cover for a potentially long-term financial burden
The scheme is a hedge against the monetary costs arising from severe disability, and provides some peace of mind
[SINGAPORE] Is long-term care insurance worth your while? If you must be severely disabled to qualify for a claim, and you survive for only months after the policy begins to pay out, is it worth paying premiums for? This question has long dogged Singaporeans. ElderShield was first launched in 2002, and debate around it was fierce due to its fixed payout – initially S$300 a month for up to five years. It was enhanced in 2007 to pay out S$400 a month for up to six years.
CareShield Life is a much-improved plan rolled out in 2020. Payouts are higher and can be paid for life, or as long as the claimant is unable to perform three of the six activities of daily living (ADLs). The payouts increase annually until the age of 67 or when a claim is made, whichever occurs earlier.
ADLs comprise washing, dressing, feeding, toileting, moving around and transferring – say, from chair to bed. They are not unique to ElderShield or CareShield Life; they may also be used as criteria for disability income insurance, which may require two out of the six ADLs.
Recently a WhatsApp message circulated anew on an issue raised by Member of Parliament Sylvia Lim in 2018 in Parliament. She had cited the case of a patient who suffered from kidney failure and had his leg amputated. He initially received ElderShield payouts in 2014. But a review subsequently found that he was able to perform all six ADLs, “albeit requiring some assistance”, and payouts ceased. Following an appeal by the family, he was found to be severely disabled and payouts resumed in 2017. But he died a month after. The Ministry of Health recently issued a statement on the inaccuracies in the message. CareShield Life does not require 30 years of premium payments, for instance, before you can benefit from it. It can make payouts any time a policyholder suffers from disabilities.
I believe many people misunderstand long-term care insurance. This class of policy is a tricky one for insurers who need to strike a balance of attractive benefits, affordable pricing and a potentially long liability. CareShield Life and ElderShield address these elements in a few ways. Since they’re directly administered by the Central Provident Fund Board, there is no distribution cost, which helps to keep premiums affordable. Premiums are deducted from MediSave and are not an out-of-pocket burden. There are also premium subsidies and support from the government.
I myself opted into CareShield Life. For me, there is an element of self-selection. After a stroke in 2017, my mother now suffers from advanced dementia. To my layman’s eyes, she’s unable to perform any ADL. I grapple with this question: How vulnerable am I?
Disability is a major risk, arising not only in one’s senior years, but also among younger people who have a stroke or worsening chronic disease. It has been reported that more than half of those receiving a payout from CareShield Life are under 40. One in two Singaporeans over 65 is expected to develop severe disability. The CareShield Life Council is reviewing the scheme and is expected to make recommendations later this year. A relaxation of the claims eligibility criteria will be welcome.
Ultimately, the scheme is a hedge against the financial impact of severe disability – even if partial, due to inflation and the high cost of services. Still, the plan affords some peace of mind, at a relatively low cost.
I’m happy to have it – and I would be even happier never to have to claim from it.
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