Why It’s Never Too Early to Get a Long-term Care Insurance Plan
As the population ages, securing long-term care insurance in Singapore is becoming more vital.
According to MOH, an estimated 1 in 2 healthy Singaporeans aged 65 could become severely disabled in their lifetime. In terms of long-term severe disability, MOH found that 3 in 10 could remain severely disabled for 10 years or more. As Singapore greys, these figures will only increase and long-term care plans will become increasingly important, especially for the elderly, those living with disabilities and their caregivers.
The sobering reality is that the likelihood of facing health challenges that impact your ability to live independently increases as you age. A stroke, a fall, or a chronic illness can suddenly change your life, making everyday tasks like dressing or bathing a monumental challenge.
In turn, the costs associated with long-term care, such as professional caregiving, rehabilitation, and medical equipment, can quickly accumulate, putting immense financial strain on individuals and families. This is where a long-term care policy proves critical.
Long-term care plans can help you navigate the life changes that such health challenges bring. With coverage options for disability, dependants, and death, a long-term care plan forms a financial safety net for you and your loved ones.
But what is long-term care insurance, and why is it important for people as young as 20 years old to start planning for it now?
Long-term Care & Activities of Daily Living
In general, long-term care refers to non-medical care, designed to help those who have problems performing any of the six Activities of Daily Living (ADLs) below:
- Washing – The ability to wash in the bath or shower (including getting into and out of the bath or shower) or wash by other means.
- Dressing – The ability to put on, take off, secure and unfasten all garments and, as appropriate, any braces, artificial limbs or other surgical or medical appliances.
- Feeding – The ability to feed oneself food after it has been prepared and made available.
- Toileting – The ability to use the lavatory or manage bowel and bladder function through the use of protective undergarments or surgical appliances if appropriate.
- Walking or Moving Around – The ability to move indoors from room to room on level surfaces.
- Transferring – The ability to move from a bed to an upright chair or wheelchair, and vice versa.
Some may be able to rely on their loved ones, but others may need to seek professional assistance such as in a hospital, nursing home or care centre.
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Understanding Long-term Care Insurance
Long-term care insurance provides financial support to cover the costs associated with long-term care services, such as home care, nursing homes, or assisted living facilities. For example, Income’s Care Secure offers lifetime coverage with monthly disability benefits of up to $5,000 if you become disabled1 and cannot perform two or more ADLs. This benefit payout2 depends on your disability status1 and the monthly disability benefit level3 chosen by you.
Embarking on your long-term care planning journey early on is crucial for several reasons:
- Lower premiums: Premiums are generally lower when you’re younger and healthier, meaning that it’s less costly to buy a long-term care plan earlier in life.
- Securing coverage in advance: You might become ineligible for coverage after developing health conditions. By planning before any potential health issues arise, you ensure you’re protected before any health conditions develop.
- Peace of mind for your loved ones: Caregiving can take a financial and emotional toll on your loved ones. With a long-term care plan, you relieve them of some of that burden with a financial safety net.
- Maintaining your dignity: A long-term care plan empowers you to afford quality care, preserving your independence and dignity even in the face of disability or illness.
Do I Need a Long-term Care Plan?
It’s important to remember that no one is immune to becoming disabled. While you may be young, healthy and able-bodied today, you never know when unexpected accidents and illnesses can occur, and lead to disability at any point in your life. This is why it’s good to have long-term care insurance as a safety net. If you’re looking to protect yourself in the event that such unfortunate events occur, it’s recommended that you buy long-term care insurance as early as possible, as you won’t be able to qualify if you already have a debilitating condition.
By 2030, it’s projected that more than a quarter of all Singaporeans will be above 65 years old and by 2050, that number is projected to rise to half the population.
What this means is that as we grow older, we’ll each have fewer able-bodied caregivers available to look after us. Our children may have their own families and responsibilities, and caring for you in times of disability may lead to financial, psychological and physical challenges for your loved ones.
Sure, there are other options you can consider, like nursing homes and private nurses, but these can be expensive. A fundamental question to ask yourself is, can you afford it?
With a long-term care plan, you’re not only prepping for your own welfare and finances should disability occur, but also ensuring you don’t over rely on your loved ones.
Won’t My Existing Insurance Policies Cover Long-term Care?
In short, probably not.
While it's common to have health, personal accident, and life insurance plans, these policies typically focus on acute medical events, accidents, or critical illnesses. They may not cover the ongoing, non-medical support needed for long-term disabilities, such as assistance with daily living activities or home modifications. Additionally, long-term care insurance often has specific eligibility criteria and claim processes tailored to the unique needs of those facing extended disabilities.
Long-term care plans are also valuable supplements to existing government insurance. For example, Income’s Care Secure plan enhances coverage under Singapore’s national CareShield Life plan. Supplementing your basic coverage can give you access to higher payouts to provide the necessary funds and resources for the full spectrum of long-term care costs. Moreover, with additional services such as caregiver support, dependent support, and even death benefits, you establish a more comprehensive safety net for yourself and your loved ones.
Let’s look at the different types of insurance you’re likely to have, and whether or not they’ll cover your long-term care.
Integrated Shield Plans / Health Insurance Plans
Usually the first type of insurance plan that comes to most people’s minds is health insurance. In the event of an illness, health insurance can help to cover some of the costs of your medical bill such as in-hospitalisation, outpatient and follow-up treatments, depending on your policy terms. However, health insurance generally does not cover the cost of long-term care should you become disabled.
Personal Accident Insurance Plans
Personal accident plans are meant to cover you in the event of an accident, providing compensation for injuries, disability or death. While these plans will pay out in the event of disability due to accident, they do not cover disability due to illness, and they typically only last for 3 to 12 months. Some may include covers for home modifications and physiotherapy once a disability has occurred, but again, don’t cover for at-home assistance in the long-term.
Life Insurance & Critical Illness Plans
Most life insurance and critical illness plans will provide a lump sum payout should you be struck by a critical illness or suffer total permanent disability. These payouts are typically meant to act as a financial safety net for the insured, who may be unable to work, whether permanently or for a period of time while he recovers. This particularly benefits those with dependants, so they can maintain their standard of living with little or no disruption.
While it’s possible to use that payout to hire a private caregiver for the insured who’s become disabled, factors such as the amount of sum assured, the age of the insured and what other financial commitments one may have, must be taken into consideration to determine if it would be sufficient for the long haul.
As such, having the right long-term care plan matters. While there may be overlaps between some of your existing policies — personal accident plan, disability income plan, severe disability insurance, etc — it’s important to note that these policies do not substitute one another as they are designed to target different needs. Having the right coverage for long-term care means that your policy should give you monthly payouts for as long as you are disabled and provide benefits such as dependant benefit, support benefit, death benefit, and more.
I Have CareShield Life. Isn’t That Enough?
What Do You Need to Consider When Getting a Long-term Care Plan?
When choosing a long-term care plan, find one that suits your financial needs and gives you sufficient coverage. Here are some things to consider:
Familiarise Yourself with Your Current Coverage
Before purchasing any new plan, you need to be clear of what coverage your existing insurance plans offer. This will help you identify gaps in your protection needs, while ensuring that you don’t fork out extra for coverage you already have.
For example, since CareShield Life provides coverage for severe disability (two or more ADLs), it makes sense to consider plans that provide you greater coverage for severe disability or in the event that you are only moderately disabled (two ADLs). If you have dependants, you might also want to find out if the plan provides dependant benefit for your loved ones.
Compare the Coverage Amounts and Payout Schedule
Different insurance plans provide different coverage amounts and modes of payout. For example, total permanent disability plans provide lump sum payouts instead of monthly benefits. If you have recurring expenses, monthly benefit payouts may be a more favourable option, especially in the long term. You should also ensure that the benefits will be payable for a reasonable amount of time.
Make Sure You Can Afford the Premiums
Another point to consider is the cost of premiums. As with all insurance plans, it’s important to ensure that you have the financial means to pay for it over the long haul. After all, your long-term care plan should help you ease your burdens and not add unnecessary strain to you financially.
Consider Your Current and Future State of Health
Regardless of your family history, the best time to get a long-term care plan (or any insurance plan really) is while you’re young and healthy to qualify more easily. Those who are older or already have pre-existing health conditions can face more difficulties in applying for long-term care plans. So although you may not need the plans right now, getting one as soon as you can is the key to being sufficiently covered.
Enhance Your Long-term Care Coverage
To enhance your CareShield Life Plan, consider getting Income’s Care Secure which enhances your existing coverage for disability under the government’s CareShield Life policy. Care Secure provides lifetime coverage with monthly disability benefits of up to $5,000 in the event of moderate and severe disability1 . Additionally, these comprehensive benefits include support benefits, dependant benefits, and death benefits.
Under Care Secure, you can also pay for premiums using up to $600 (per insured person per year) from your MediSave account.
Stay Ahead of Potential Health Crises with a Long-term Care Plan
Healthcare costs can be extremely taxing for you and your loved ones so staying prepared for unforeseen circumstances is crucial. Dealing with physical disability is stressful in itself. Just imagine having to cope with the financial stresses on top of that. Life may be unpredictable but we can still take active steps wherever necessary to be financially ready.
Before you’re hit by any major health concerns, consult an Income advisor to learn more about Care Secure and how it can fit into your future health care plans.
Remember — it’s never too early.
1 Moderate disability or moderately disabled means your inability to perform two ADLs, which means requiring significant assistance from another person throughout the entire activity.
Severe disability or severely disabled means your inability to perform at least three ADLs, which means requiring significant assistance from another person throughout the entire activity.
2 During the waiting period, we do not pay any claim except claims resulting from an accident. If you become disabled during the waiting period (other than due to an accident), your policy will end and you will receive a full refund of your premium.
In order to claim under Care Secure, a certification by an approved assessor under the Relevant Act that you are suffering from disability must be sent to us. Relevant Act means the Central Provident Fund Act (Chapter 36) or CareShield Life and Long-Term Care Act 2019, and subsidiary legislations as amended, extended or re-enacted from time to time.
If you become and continue to be disabled, we will pay a monthly disability benefit for life. If you become moderately disabled, we will pay 100% of the disability benefit. If you become severely disabled, we will pay 100% of the disability benefit, less the CareShield Life benefit that applies to you. If you are receiving CareShield Life benefit, we will automatically consider you to be severely disabled.
We will pay the first benefit payment immediately after the deferment period. Deferment period means the 90-day period from the claim date (inclusive). We treat the claim date as the date on which the claim form for your policy is certified by an approved assessor under the Relevant Act.
If you have recovered from a disability but become disabled again from the same cause within 180 days, we will not enforce the deferment period for the new claim. If you suffer disability arising from the same cause after the 180-day period, or suffer a disability arising from a different cause, the deferment period of 90 days applies for the new claim.
The CareShield Life payout (if any) will be administered by the Singapore Government.
3 You can purchase Care Secure at monthly benefit levels from $1,200 to $5,000 in multiples of $100.
This article is meant purely for informational purposes and does not constitute an offer, recommendation, solicitation or advise to buy or sell any product(s). It should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income Insurance products mentioned are specified in their respective policy contracts. Please seek independent financial advice before making any decision.
These policies are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Income Insurance or visit the GIA/LIA or SDIC websites (www.gia.org.sg or www.lia.org.sg or www.sdic.org.sg).
This advertisement has not been reviewed by the Monetary Authority of Singapore.
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