Disability insurance is another important part of health insurance which may be overlooked. But what exactly is disability insurance and what does it cover you for?
In Singapore, there are three main types of insurance policies which provide payout for disability. They are Disability Income Insurance,Total Permanent Disability and Severe Disability Insurance.
What is the purpose of Disability Income?
The purpose of disability income insurance is to replace the insured's lost income when they cannot work by paying a fixed amount each month to replace the income a person would lose if they are unable to work as a result of an accident or illness.
These policies may pay up to 80% of your average monthly salary. The policy aims to ease the financial loss, but will not completely replace the income earned before the accident or illness.
Disability income insurance essentially protect against the risk that a disability may prevent an individual from working and earning an income for themselves and their family. The ongoing monthly payout that a disability income insurance provides will give them the income they require to cover for their monthly expenses.
Fortunately, if you are a Singapore citizen or a permanent resident with a Medisave account you automatically qualify for severe disability coverage at the age of 40. The plan called Eldershield provides a monthly cash payout for long-term care expenses you incur directly.
To allow you to increase the monthly payout and the payout period, Eldershield Supplement was introduced. Supplementary coverage is provided by Aviva, GreatEastern Life and NTUC.
Standard benefits cover severe disability, which is ascertained based on whether you can perform at least three activities of daily living. The dependent care benefit helps cover expenses if you have children under 21 years of age. Death during severe disability is often a one-time lump sum payment of, say, three months.
What are the 6 ADLs?
Activities for Daily Living (ADLs) is a concept of how independent a person is. There are 6 activities of daily living, namely: washing, feeding, dressing, toileting, mobility and transferring independently.
*A person not able to perform at least 3 of these ADLs can qualifies for subsidies such as IDAPE or Eldershield payouts.
Singapore Citizens and Permanent Residents with Medisave accounts are automatically covered by basic ElderShield at age 40. In the event of losing the ability to perform at least 3 out of 6 Activities of Daily Living (ADLs)1, you will receive S$400* Monthly Benefit payouts for up to six years.
Do I still need disability coverage if I have eldershield?
ElderShield Comprehensive is designed to supplement basic ElderShield by providing higher benefits while stretching coverage up to a lifetime, to help you lessen the financial burden and provide greater peace of mind.
Eldershield and Eldershield Supplementary plans begin at the age of 40, the minimum age of entry, so you will need separate disability insurance to cover you until then. Even with an Eldershield plan, additional benefit coverage such as for rehabilitation may be required. You have many options for disability coverage.
Term disability coverage will tide you over nicely until age 40. Life insurance and accident insurance provide disability coverage. Ensure you have severe disability coverage and are not limited to total and permanent disability coverage. Many property insurance policies will also coverpermanentdisability leaving you uncovered for the short-term disabilities that many of us experience at some time in our lives.
Before shopping around for private insurance, you need to know what is covered, how much and for how long under Eldershield plans. Like many government plans, Eldershield provides needed funds when you need them but the payout is limited. After the premiums are paid by cash or Medisave, the plan provides a payout of $300-$400 for 60 to 72 months.