Comprehensive Guide to Disability Income Insurance

This post was originally posted on Planner Bee.

Recovering from an injury or illness takes time, and often, your job and salary are paused while you heal.

In Singapore, all citizens and Permanent Residents are covered by the mandatory MediShield Life scheme, which provides basic medical coverage in case of illness or injury. Additionally, around 71% of Singaporeans have Integrated Shield Plans (IPs) to help cover hospital bills.

However, if an injury leads to a disability, long-term medical and caregiving costs can become overwhelming, making recovery harder.

To address this, the government introduced the CareShield Life scheme, offering basic financial support for those who develop severe disabilities and need long-term care. However, this may not be enough for many, especially if the person affected is the primary breadwinner.

This is where Disability Income Insurance (DII) comes in. In this article, we’ll explain what DII is, its key features, how it differs from life insurance payouts, and why it’s important to consider having DII.

What is Disability Income Insurance?

Disability Income Insurance (DII) is designed to replace part of your income if you are unable to work due to illness or injury. It works alongside your CareShield Life coverage, providing financial support if you are temporarily or permanently unable to do your job.

DII pays a monthly benefit if you are diagnosed with a disability that prevents you from performing two or more of the six Activities of Daily Living (ADLs).

The six ADLs are:

1. Washing: The ability to wash yourself in the bath or shower without assistance.
2. Dressing: The ability to put on and take off clothes, and look after your appearance without help.
3. Feeding: The ability to feed yourself (not including food preparation).
4. Toileting: The ability to use the toilet and clean yourself without assistance.
5. Transferring: The ability to move from one place to another, such as from the bed to a sofa, without aid.
6. Moving around: The ability to move from place to place on a flat surface without support.

Key features of DII

Although the details of Disability Income Insurance (DII) can vary between providers, there are some common features:

• It pays a fixed monthly amount to replace part of your income if you are unable to work due to illness or injury. However, the payout will not cover 100% of your income.
• The monthly benefit can be paid for a set number of years or until you reach a certain age. Some policies may offer lifetime coverage.
• If you recover from a temporary disability, the payout will stop once you are able to resume to work.
• Benefits may be reduced in line with your recovery.
• DII premiums are usually waived while you are receiving benefits due to disability.

Policies may define disability in different ways depending on your situation. It is important to check with your agent to understand the specific definitions used before committing to a plan.

Is CareShield Life enough?

By the time they reach 65 years old, one in two healthy Singaporeans could experience a severe disability. This could be due to a sudden event, such as stroke, or the worsening of chronic conditions and age-related illnesses. These individuals will need long-term care.

While CareShield Life provides valuable coverage, supplementing it with a Disability Income Insurance (DII) plan can offer additional benefits. Here’s how CareShield Life and a typical DII policy differ:

Read more: All You Need To Know About CareShield Life

Take Eric, for example. He’s a 45-year-old engineer, married with two children, and earns a monthly salary of S$6,000. After a car accident, he’s bedridden and can no longer perform four out of six ADLs without assistance.

His CareShield Life policy will provide about S$662 monthly, which is meant to help with his long-term care. However, with a family to support, this amount isn’t enough for Eric.

If Eric had added a DII plan to his CareShield Life, such as Great Eastern’s GREAT CareShield, NTUC Income’s Care Secure, or SingLife’s CareShield Plus, he could receive up to 75% of his salary every month—S$4,500.

With GREAT CareShield, Eric would also get a lump sum of S$13,500 (three times his monthly payout) upon diagnosis. Plus, he’d receive a caregiver benefit (60% of the monthly payout for up to 12 months) and a dependent benefit (30% of the monthly payout for up to 48 months).

Instead of just the S$662 monthly payout from CareShield Life, Eric could receive S$8,550 each month for the first 12 months of his disability, along with a one-time lump sum of S$13,500.

Pro tip: Exploring different DII plans can help ensure better support for you and your family in case of disability. Get a quote today and explore the best DII plan for your needs.

Understanding the differences between DII and Life Insurance TPD payouts

Disability Income Insurance (DII) and Total Permanent Disability (TPD) payouts from life insurance both support individuals facing disability, but they serve different purposes and apply in distinct situations.

Life insurance TPD payouts often have stricter requirements, such as the inability to work or loss of specific bodily functions. Partial payouts may apply for less severe disabilities, such as losing one limb or sight in one eye.

TPD lumpsums aim to settle immediate debts and expenditures, while DII monthly payouts help cover ongoing living costs and long-term care needs.

Should you get DII?

Disabilities can happen suddenly and often have lasting financial impacts. Without proper coverage, you may need to rely on savings, family, or debt to manage expenses. DII provides a steady income stream, helping you avoid these challenges.

DII is particularly important for:

• Breadwinners: To ensure financial security for dependents.
• High-income professionals: To maintain their lifestyle.
• Freelancers: Who lack employer-provided benefits.

Ask yourself: can you manage the S$662 monthly payout from CareShield Life if you become unable to perform three out of six ADLs? If the answer is no, consider supplementing CareShield Life with a DII policy tailored to your needs.

If you have questions about DII or need help finding the best option for your needs, contact Team Planner Bee at [email protected]