Karen Tang, CFP®: Certified Financial Planner in Singapore

The Need To Secure Your Long Term Care

financial planner singapore

Severe disability can happen to anyone, at any age. It can cause both physical and financial hardship for you and your loved ones. Life’s savings can be wiped out overnight by the high costs of long term care. While your basic Eldershield offers some payouts (and for a limited time period only), we all know that it is barely enough to even hire a trained helper!

Therefore, it is a good idea to supplement our basic Eldershield coverage with a plan that pays out a higher monthly benefit.

Did you know?

1) More than 70% of Aviva’s Eldershield and MyCare claims were made below the age of 55 (based on Aviva claim statistics from 2007 – 2010).

2) By 2030, only 2 adults will be taking care of 1 elderly person. (Source: c3a.org.sg)

3) Long term care can cost a bomb!

4) 37% of caregivers have been providing care to their recipients for over a decade (Statistics Singapore Newsletter, September 2011).

5) Around S$90 million has been paid out since ElderShield was launched in 2002, with about 12,500 successful claims. (ChannelNewsAsia, April 4, 2016)

Risk factors that you need to be aware of:

  • Singaporeans are living longer but will spend 8 years in ill health or disabled (3 Dec 2007, The Straits Times)
  • Younger people are getting old people’s diseases (16 Mar 2010, The Sunday Times)
  • The number of cases for dementia will more than double to 45,000 by 2020 (4 Mar 2010, The Straits Times)
  • Incident rate for common illnesses leading to long term care:
    • Heart disease – 23.6% (MOH 2009 statistics, principal causes of death)
    • Hypertension – 24.9% (MOH 2004 statistics, disease burden among 18-69 years)
    • Cardiovascular diseases – 8.0% (MOH 2009 statistics,principal causes of death)
  • Based on the experience of other advanced countries, such as the UK, men and women have a 35% and 45% chance of them being disabled in their lifetime respectively (source: MOH website)

The case for Eldershield supplement

The loss of physical independence is frustrating enough, let alone having to agonise over medical bills while recuperating. In the worst case scenario, someone in the family may even have to stop work to take care of the disabled loved one at home. This is certainly not a situation that anybody would want.

Which plan gives you maximum bang for the buck?

Highlights from The Straits Times, 10 November 2007

  • “… rehabilitation benefit … Only Aviva offers it as part of its plan. This is useful as a person who is severely disabled now could get better later given medical advances”
  • “But its (GE) 10 years’ coverage is a limitation, the experts said. They prefer Income and Aviva’s lifetime coverage.”
  • “Another factor in Aviva’s favour is that it gives rehabilitation benefit at premiums which are not much more …”
  • “… an example of a 40 year old man who wants to get $1,000 a month for life if he becomes disabled … An Aviva basic plan and supplement costs $695 a year until premiums no longer have to be paid at age 67 or $501 a year.”
  • “An Income set of plans cost $860 a year till age 65. A GE set costs $549 per year, but coverage lasts for only 10 years.”

Note: Notwithstanding what was published, I did my own comparison as well. Amongst the 3 insurers, Aviva stands out for its comprehensive coverage and competitive premium rates.

Benefits of Aviva’s Eldershield supplement (MyCare and MyCare Plus)

  • You can increase your monthly payout up to $5,000
  • You can upgrade your Eldershield short term cover into lifetime benefits
  • You can choose to cover for 2 out of 6 ADLs instead of the usual 3 out of 6 ADLs
  • You can continue to receive monthly cash payouts (50% of monthly benefit if you recover but are still unable to do 2 out of 6 ADLs) when you recover
  • You can take advantage of the rehabilitation benefit found in MyCare
  • You get to enjoy level premiums i.e. premiums that do not increase with age
  • You can enjoy dependent care benefit
  • You can use up to $600 from Medisave per year to pay for the premium.
  • You can use Medisave funds to pay the premium for your spouse, parents or grandparents.
  • Future premiums are waived upon claims

Should you wait till you’re older?

You may think you can defer getting the ElderShield supplement till when you’re older, say in your 50’s. Think again. The chances of severe disabilities increase sharply as we age. Illnesses, accidents and frailty are all common reasons for temporary or long term disability. By then, it is very likely that insurers will either reject or accept your case with special terms.

Take charge now!

With proper financial planning, you can ensure long-term security for you and your loved ones. Get the best that money can buy while you are still healthy.

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