April 23, 2007
Look out for add-ons to supplement ElderShield
They can be bought separately and may pay higher benefits over longer periods
By Salma Khalik, Health Correspondent
EXPECT a slew of insurance plans to protect the elderly against disability in their later years.
With the introduction of supplementary schemes for ElderShield that can draw on Medisave accounts for as much as $2,000 a year in premiums, insurers can afford to be creative in what they offer.
Tenders for such schemes were put up on April 2.
The anticipated new schemes will be on top of the basic ElderShield - the national severe disability scheme - which will be changed to provide people who qualify with payouts of $400 a month for up to six years.
Several insurance companies plan to offer supplementary schemes when the new five-year period for ElderShield starts in September.
They can be bought separately by anyone who already has ElderShield. Thus, someone insured by one company for basic ElderShield may buy a supplementary scheme from another insurer.
The five-year-old disability insurance, meant for the elderly who need full-time help to do simple things like going to the toilet or eating, has come in for heavy criticism over the low payouts and the need to have at least three disabilities before a claim is allowed.
While the basic scheme will likely stick with the current criteria, supplementary ones are expected to be open to creative enhancements.
According to the tender documents, they could offer higher benefits, pay over longer periods, be less strict on the definition of disability, and offer no-claim discounts too.
But the underlying principle remains - so they may not offer surrender value which allows a policy holder to collect a lump sum payment if he stops the insurance after a certain number of years.
After all, the scheme is meant to provide coverage for the rest of a person's life.
But the supplementary schemes are allowed to offer an initial lump sum payment of three months' worth of benefits, since the initial period of disability may be a greater financial drain.
They may also extend payment for up to three months after the death of the person, to help with funeral and other expenses.
Dr Lam Pin Min, a member of the Government Parliamentary Committee (GPC) for Health, said that with people living longer, 'the importance of the disability insurance scheme will be even greater'.
Allowing as much as $2,000 from Medisave to be used on premiums, he said, would encourage people to 'take up appropriately and adequately covered disability insurance schemes'.
Madam Halimah Yacob, who heads the GPC, noted that such enhancements 'will not be suitable for older Singaporeans with low savings'.
Health Minister Khaw Boon Wan has proposed that the basic scheme should also be improved, by increasing the monthly payouts from the current $300 to $400, and the period of payment should go up from five to six years.
This will mean higher premiums, even for the basic scheme. But he has pledged that this will not exceed $120 more a year. Premiums paid depend on the age at which a person joins ElderShield.
At age 40, women pay about $190 and men $150 a year. If they join at 60, women pay $845 and men $630 a year. Payment stops when they are 65 years old, but coverage will be for life.
The tender document also stated that current policy holders who want to remain on the existing plan may do so. There is also a scheme which allows people who stop after paying a minimum amount, to get a pro-rated payout starting at $100 a month, should they become disabled.
salma@sph.com.sg