Thursday, April 24, 2008

Eldershield. Keep or don't keep?

ElderShield is an insurance scheme introduced by the Ministry of Health (MOH) in 2002 to all Singapore Citizen and PRs between age 40 and 69 as at 30 Sep 2002 to provide financial help to those who are unable to take care of themselves because of severe disabilities.

Why Implement it?
It was projected that as many as 1 in 12 elderly persons will suffer from disabilities as a result of aging and illness and can make them incapable of doing simple everyday activities. These people need long term care which can be expensive and may require financial help.

Who is it for?
ElderShield provides cash payout every month to those who are not able to do 3 or more of the following Activities of Daily Living - washing, feeding, dressing, toileting, mobility and transferring.

My formula to remember the 6 ADLs?
E - Eating
T - Transferring
D - Dressing
U - Use Toliet
M - Mobility
B - Bathing

What is the payout?
a) Those who entered into the Steady State before 30 Sept 2007 (Eldershield Plan) are entitled to $300 monthly benefit, for benefit period up to 60 months.
* Max payout = $18,000
b) Those who entered into the Steady State on or after 30 Sept 2007 (Reform Eldershield Plan) will be entitled to $400 monthly benefit, for benefit period up to 72 months.
* Max payout = $28,800

What is the premium?
a) For normal Eldershield, the eventual total premium paid will be around $3.7k for men and $4.9k for women
b) For reformed Eldershield, the eventualy total premium paid is around $4.5k for men and $5.7k for women

Where can you get these plans?
Check it out at

Is the premium worth the cover?
a) Our government made the research that 1 in 12 will be incapable of performing the 3 ADLs.
- Well, its possible. But I'm not sure how many years later will this statistics come true.
- The insurance companies should be able to collect millions in premium and generate a good investment profits before serious claims comes about
b) How many do you think can smell the money?
- If the person become disabled, how long will the person live to collect the full $18k or $28.8k?
- Not forgetting that many will never be disabled before they die
- Many may only get only 1 or 2 ADLs disability and a claim is not possible
c) Mathematically, a woman may pay as much as $5,000 for a maximum claim of $18,000. You are betting on a probability of 27%. Not forgetting that the $18,000 may not be fully paid out as the insured might die before even collecting back the premium.

Is it worth to keep this plan then?
Many people came to me and seek my opinion if they should surrender this plan. They also know how to calculate like what I did above. I'll advice:
Better keep. Why?
a) Life is too unpredictable. Government come out with this plan is to tell us that "they do not want to take care of us when we are old. We better take care of ourselves."
b) Its a government scheme, they will make sure the insurance company return back their profit to policyholders. The scheme will keep improving. Be patient, don't surrender.
c) If disability really strike, the cost in daycare centres and nursing home can be high. So better don't play play unless you have plenty of $$$.
d) Its Medisave money. Cannot use for other purpose anyway.
So Close 1 eye, don't be too calculative. Just pay, be safe...

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