Statistics reveal that 1 in 2 healthy Singaporeans aged 65 could become severely disabled in their lifetime, and may need long term care. Factors leading to severe disability may include sudden disabling events such as stroke and spinal cord injuries, the deterioration of medical conditions, or the progression of illnesses as we age, such as dementia.
Planning early for future long-term care needs is crucial, but determining how much to save can be challenging due to the uncertain cost of long-term care. Insurance programs like CareShield Life assist in managing our risks against potentially catastrophic long term care expenses.
For most Singaporeans, CareShield Life is mandatory – but upgrading it is not. You might therefore be wondering “Should I enhance my CareShield Life coverage at an early stage?”. This article aims to provide an answer to that question.
Now, let’s discuss the benefits of enhancing your CareShield Life coverage at an early stage.
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Increased Monthly Payouts
Upgrading your CareShield Life plan can provide a higher monthly payout that covers a broader range of expenses. However, it’s important to note that additional cash premiums may be required to receive a higher payout of up to $5,000 per month. An early upgrade can potentially offer a higher monthly payout at a lower premium compared to upgrading later.
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Easier Access to Eligibility
CareShield Life basic plan only provides a payout when an individual is unable to perform at least 3 out of 6 Activities of Daily Living (ADLs). However, by opting for CareShield Life supplements, you can have more choices for claim eligibility. This includes sticking with the standard 3 out of 6 ADLs or selecting a 2 out of 6 ADLs claim eligibility option.
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Widened Choice of Payment Terms
CareShield Life supplements also offer different options for premium payment terms. Instead of the standard payment until age 67, various options are available from different companies, such as paying until age 84, 97, and beyond. However, it’s essential to note that shorter premium payment terms may come with higher premiums, even when all other factors are equal.
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More Efficient Use of CPF MediSave
You can use your CPF MediSave to pay for the premiums of CareShield Life supplements, subject to a cap of $600 per year. If the premiums exceed this limit, you will need to top up in cash. Most Singaporeans typically fully utilise the limit of $600, as their MediSave balances earn 4% interest per year. As MediSave has a withdrawal limit, using your MediSave funds to enhance your CareShield Life coverage may turn out as an efficient way to utilise your money. A higher coverage is likely to provide you with better protection, enabling you to receive better long term care services.
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Get Better Coverage
While the basic CareShield Life scheme covers pre-existing medical conditions, the supplements provided by insurance companies may not. If you have existing health conditions, you might have to pay a higher premium, be excluded from coverage, or even face rejection. Therefore, if you are currently in good health, it would be advisable to seize this opportunity to apply for better coverage.
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No Lock-in
Payment for CareShield Life upgrades is on a “pay as you go” basis, similar to the Integrated Shield Plan. Discontinuing the CareShield Life upgrades incurs no penalties except for premiums already paid. However, as the upgrades do not accumulate cash value, discontinuing will result in losing the additional coverage provided by the supplement. It’s recommended to speak to a financial consultant before deciding to discontinue the upgrade.
Now that you have read about the benefits of CareShield Life upgrade, you may want to consider enhancing your coverage if you need a more comprehensive coverage than what the basic plan provides. It may be worthwhile to consider upgrading to CareShield Life supplements for a higher monthly payout, among other benefits mentioned above.
Talk to your Financial Consultant if you’d like to discuss about this article and gain more information.
This article is for informational purposes only and should not be relied upon as financial advice.