Careshield Life is welcome, but more public education is needed

LONG-TERM care insurance is a building block of individuals' risk protection strategy.

It kicks in when one is unable to perform three of six activities of daily living (ADL), which include feeding, washing and dressing. This tends to happen in old age, but it could also happen at younger ages due to critical illnesses such as a stroke or an accident. This class of disability insurance is something of a quagmire for commercial insurers. Healthcare advances have substantially extended people's life expectancy, creating an unanticipated long tail of liabilities for insurers. In the US, a number of insurers have withdrawn from the market, as they find themselves increasingly unable to support the promised benefits with the premiums collected. In a number of countries, the plans are administered by the government on a not-for-profit basis.

Singapore currently has Eldershield, administered by private insurers Aviva, NTUC Income and Great Eastern. In 2020, a new scheme - Careshield Life - will be rolled out, to be administered by the government. Based on the Eldershield review released earlier this year, Careshield Life will feature a number of improvements in plan design. These include the coverage of pre-existing conditions; expansion of the scheme to younger ages (30 versus Eldershield's 40), and enhanced payouts - a higher initial payout compared with Eldershield, regular increases in payouts over time and payouts for life.