CareShield Life: What Is It, and Is It Worth It?

This post was originally posted on Planner Bee.

Confused about CareShield Life? You can hardly be blamed if you’re not sure what it is, and how it fits in among the numerous national healthcare and savings schemes such as MediShield Life, MediSave, CPF LIFE and ElderShield.

While its name bears similarities with other schemes, CareShield Life has its own distinct focus and importance. Its primary purpose is to provide financial support for those who develop severe disabilities, and need long-term medical and personal care.

Why is CareShield Life necessary, and how does it stack up as protection against disability risks in Singapore? We explain what you need to know about the policy.

CareShield Life – a 30th “birthday present”

For most of us, our first introduction to CareShield Life would likely take place when we turn 30. That’s when Singapore Citizens and Permanent Residents born in 1980 or later are automatically enrolled in the scheme.

Participation is optional for those born in 1979 or earlier. For those born between 1970 and 1979, were insured under ElderShield 400 and have not developed a severe disability, they would have been automatically enrolled from 1 December 2021.

Disability risks in Singapore

CareShield Life was introduced in 2020 to replace ElderShield, with the view that one in two healthy Singaporeans aged 65 could eventually develop severe disabilities, where they are unable to do three or more activities of daily living. These disabilities could occur due to a sudden event, or the worsening of chronic conditions and diseases, or the worsening of illnesses alongside aging.

It is predicted that half of those who are healthy at age 65 will become severely disabled later in life. Though the disability may last four years or less for some, three in 10 are expected to be severely disabled for a decade or more. CareShield Life’s objective is to help all Singaporeans pool their risks to build protection against what could be potentially high long-term care costs.

The risks of severe disability among the population are understandably growing alongside increasing life expectancy. But what is surprising is that many beneficiaries of CareShield Life are not the elderly – half of those receiving payouts are below 40 years old. This is due to some recipients having chronic conditions that have affected them since birth.

How the scheme works

Premiums are paid annually until you turn 67, or 10 years after you join the scheme, whichever is later. These premiums increase annually to account for inflation – by 2 percent each year from 2020 to 2025, and thereafter according to the recommendations of an independent CareShield Council. These premiums can be fully paid by MediSave. Your family members can also help to pay these premiums using their MediSave, or to top up your MediSave account with cash.

Each person enrolled in CareShield Life has a personalised premium, based on your sex and your age upon joining, with the net amount starting from around $200 plus if you were enrolled at age 30 upon the plan’s launch in 2020. The premium also takes into account means-tested subsidies for those from low- to middle-income households. In addition, transitional subsidies apply for those born in 1980 or later, from 2020 to 2024.

The plan covers you for life. Should you develop a severe disability, you will receive monthly payouts. In 2024, the monthly payout is $649, and this will increase every year until you turn 67 or when you make a successful claim, whichever is earlier. Once a claim is successfully made, the monthly payout amount will remain the same for the rest of the disability’s duration.

You can also opt to purchase a supplemental plan from insurers such as SingLife, Great Eastern or Income to complement your CareShield Life plan, which can provide you with higher monthly payouts and other benefits. Supplemental plans can also be paid for using MediSave, up to $600 per year.

Pro tip: Easily compare the CareShield Life supplements using our breakdown

Is CareShield Life worth it?

As an insurance plan to help cover the costs of long-term care, CareShield Life is overall an improvement over ElderShield as the payouts are higher, and for life. ElderShield, in comparison, provided payouts of $300 per month for up to five years, or $400 per month for up to six years.

Should a disability occur, the payouts will help to offset the costs of treatment and associated caregiving expenses, such as hiring a helper. Home personal care, for instance, starts at around $25 per hour, while home medical services start at around $176 per visit. Meanwhile, the costs of staying in a nursing home are estimated at between $2,200 and $4,200 per month.

Weighed against the fact that CareShield Life premiums begin at age 30 and end at age 67, and crucially can be paid using MediSave, the payouts would be significant in reducing what could otherwise be an onerous financial burden – especially considering how healthcare costs increase every year. The increasing payouts of CareShield Life would also help to manage the rising costs.

The financial investment through premiums, can also be further offset by the means-tested and transitional subsidies. Additional premium support is also available for those who need more financial assistance.

Read more: How to Prepare for Retirement

Is CareShield Life enough?

CareShield Life helps to ensure that you have some monthly income to help with long-term care needs. Though it would help to offset some of these costs, depending on the predicted needs, it may make sense to get a CareShield Life Supplement to increase the monthly payouts.

In addition, these payouts can be complemented by other plans. One such option is disability income insurance, which has payouts that help replace your income due to disabilities that cause you to be unable to work.

Another related type of policy would be life insurance plans with a Total Permanent Disability benefit. If you become permanently disabled, such plans pay out in a one-time lump sum. However, the conditions for payout are usually the most stringent, since the disability has to be permanent.

Conclusion

Given the high probability of severe disabilities developing in our lifetimes, CareShield Life provides the assurance of a base payout to help with long-term care costs. It is a good reason to examine what plans we have in place to deal with such circumstances, and to boost the coverage using CareShield Life supplements or other types of insurance if needed.