If you are born between 1980 and 1990, you are covered under Careshield Life, from 1st Oct 2020.
What is Careshield Life?
Careshield Life is a compulsory long-term care scheme administrated by the Singapore government. It provides life time coverage and lifetime cash payouts, in the event that you are unable to perform three ADLs (Activities of daily living – washing, dressing, feeding, toileting, mobility and transferring).
Eligible payouts start at $600/month in 2020 and will increase annually until age 67 (it is pegged at 2% increase from 2020 – 2025) or when a successful claim is made.
Your Careshield Life premium is 100% payable by Medisave, and the premium term is until age 67. Premium will increase according to your age, so as to cater for a higher payout from Careshield Life.
In the unfortunate event where you make a successful claim, your monthly payout amount remains fixed, and you’ll receive payouts for as long as you are severely disabled.
For more information on Careshield Life, please refer to this.
Careshield Life covers more
Careshield Life is an upgraded version of the previous long-term care plan: Eldershield.
It has broaden and improved upon Eldershield’s coverage, with the inclusion of younger individuals as well.
This highlights two important nuances of insurance planning;
- having adequate coverage from a younger age
- your payout amount should increase over time, in order to factor for inflation.
But it isn’t sufficient
Honestly, is $600 payout sufficient, if one is disabled and unable to perform activities or daily living?
I doubt so.
Based on AVIVA’s long-term care study in 2018, long term care can be prolonged and costly. The average expenses for long term care worked out to be $2,324 per month, on average.
Enhance your Careshield Life payout by using Medisave
In order to sufficiently cover this expense, one can enhance their Careshield Life with supplement plans to increase the potential payout.
The premium can be paid by Medisave with the cap of $600/year.
Case Study – Planning for long term care as a 34yo married man
I was born in 1986 and am covered under Careshield Life as well.
Since the premium for Careshield Life supplement plan can be paid by Medisave, I want to enhance it for higher payout. But at the same time, I’ll want to limit my premium per year at $600 or lower, so that I don’t have to use cash to pay for the enhancement.
This works out to be:
- Basic Careshield Life payout: $600 per month (2% increase annually* until a successful claim)
- Careshield Life supplement payout: $1600 per month (premium of $577.97 per year, 100% payable by Medisave)
*from 2020-2025, rates will be readjusted by based on recommended premium adjustments thereafter.
By coupling Careshield Life with the Careshield Life supplement plan, I will get at least $2,200/month payout if I am unable to perform 3 ADLs. This figure is pretty close to the average expenses for long term care need of $2,324/month.
To find out more about Careshield Life and how much you should allocate to your Careshield Life supplement plan, you can register for a free, personalised consultation here. I will arrange a ZOOM discussion with you.
