Are ElderShield Plans Good For Your Ageing Parents?

|Posted by | Insurance, Retirement Planning

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Caring for elderly parents in Singapore costs over S$1,200 a month. But ElderShield Plans can reduce the financial burden.

Elderly persons have an increased risk of suffering accidents or medical conditions that could cause temporary or permanent disability. Because disabilities severely reduce the ability to take care of oneself, afflicted individuals require long-term care.

Providing adequate long-term care requires a dedicated caregiver. However, giving up a career in order to take care of a loved one is a difficult choice, given Singapore’s high cost of living. The common alternative is to hire a domestic helper to fulfil the role, or to admit your elderly disabled into a nursing home.  

in Singapore, Long-Term Care Costs Start at S$1,200 a Month

Both domestic workers and nursing homes are costly options. Nursing homes cost anywhere from S$1,200 to S$3,600 per month, although government subsidies can reduce the bill by up to 75% for eligible households.

If you choose to hire a foreign domestic worker, you’ll need to pay a monthly salary of between S$400 to S$500, on top of providing meals and living quarters. Additionally, there are agency fees, levies, insurance coverage and other expenses involved.

Elderly persons with disabilities will also require regular check-ups, rehabilitative treatments, medication, mobility aids, prosthetics and other medical services. The costs of these requirements will further strain your budget.

To help Singaporeans cope with the high costs of long-term care, the government has implemented a basic insurance programme, ElderShield. There are also ElderShield supplement plans available that can expand the scheme’s coverage.  

What is ElderShield?

Singaporeans and PRs reaching 40 years of age are automatically enrolled into ElderShield, which is a national insurance programme that pays you cash every month in the event of severe disability.

Severe disability is defined as the inability to perform at least 3 out of 6 activities of daily living (ADL). The ADLs are:

  • Washing (bathing or cleaning, or being able to get in and out of the shower)
  • Dressing (putting on and taking off of clothes, braces, prosthetics and other medical devices)
  • Feeding (eating food after it has been made available)
  • Toileting (using the lavatory and protective undergarments)
  • Walking or Moving Around (indoors between rooms and on even surfaces)
  • Transferring (from a bed to an upright chair or wheelchair, and back)

Should a person be unable to perform at least 3 of the above without help, he or she will be eligible for ElderShield benefits.

However, should there be an improvement such that they are able to perform more than 3 of the ADLs unassisted, the ElderShield payouts will stop.

How Much Coverage Does ElderShield Give?  

ElderShield premiums are payable using Medisave. Anyone turning 40 in or after September 2007 is enrolled under ElderShield 400, which pays out S$400 per month for a maximum of 6 years.

For Singaporeans covered under ElderShield 300 – which kicked off the scheme in 2002 – the payout is S$300 per month for a maximum of 5 years.

Most of us are covered under the higher paying plan; individuals under ElderShield 300 were given the option to upgrade in 2007.

Nevertheless, S$400 per month is hardly enough to pay for long-term care in Singapore.

Can I Upgrade ElderShield Coverage?

Aviva, Great Eastern Life and Income are the appointed providers of ElderShield. These private insurers are also authorised to sell supplement plans that upgrade your ElderShield coverage in several ways.

The foremost benefit of upgrading your ElderShield plan is to raise the monthly payouts. Doing so will enable you to better cope with the costs of long-term care for your needy loved one.

You can choose the amount of increase, which can reach up to thousands of dollars each month. However, the premium you’ll have to pay will also rise, so be sure to strike a balance between future payouts and current needs.

Besides increasing the benefit paid out each month, supplementing your ElderShield plan will also extend the payouts for life. This can help relieve you of any future financial burdens, especially if your loved one’s disability continues beyond the 6-year period covered by basic ElderShield.

Supplement plans also provide other benefits not found in ElderShield, such as lump-sum payments upon onset of severe disability, recovery, or death.

Some plans also provide higher payouts should there be young dependants, or partial payouts in the case of less severe disability (i.e., being able to perform 4 out of the 6 ADLs).

Choose Coverage According to Current Needs

One point bears repeating here: ElderShield and its supplements are a good way to cover you and your family against the high costs of long-term care, but the protection offered is conditional.

Remember that ElderShield and its supplement plans only pay out monthly benefits during the period of severe disability. Once the disability ends (either through recovery or death), the payouts stop.

Also, there must be a debilitating degree of disability present (remember, failure to perform 3 out of 6 ADLs, see above) before the benefits can be claimed.

All said, it is a good idea to upgrade ElderShield for you and your parents, given the rising life expectancy of  Singaporeans. Afterall, you don’t want the cash payouts to stop when you need them the most.

To avoid paying too much premium, take into consideration the likelihood of severe disability (your loved ones may be really, really old by the time they qualify for the benefits, and may not need payouts for many years) as well as a realistic forecast of your financial status by then. \

And do remember to speak with a qualified professional to help you check your assumptions and estimations before you sign up any plan.

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Alevin ChanBy Alevin Chan
A Certified Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimize happiness and enjoyment in his life.


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