Disability income vs Careshield and its supplement?

Hi anon,

There are actually fundamental differences between disability income (DI) coverage and long term care coverage (LTC) via Careshield Life (CSL).

DI is meant to cover you during your active employment years and LTC is usually for when you're much older. DI mitigates loss of income from an inability to work and LTC helps to subsidise or defray the cost of nursing.

To claim DI requires that you that you cannot perform the material duties of your occupation while LTC claims are based on inability to perform the Activities Of Daily Living. It is however also easy to see why the lines have been blurred between these two types of plans. Suffering from the inability to perform ADL may in fact lead you to be unable to perform the material duties of your occupation.

However, a surgeon who lost a finger might be unable to perform surgical operations and suffer a loss of income, and yet not meet the CSL claim criteria.

Not every occupation requires DI coverage in my view. If you are very skilled by virtue of training, education or experience and cannot be easily replaced, then disability income may be a good thing to have.

However, everyone would need LTC as ageing is inevitable (and also why CSL is made compulsory). Nursing costs are only going to get significantly more expensive with increasing labour and healthcare costs and increasing longevity.

So in summary, they're different. If you aren't easily replaceable due to training, education, or experience, get covered with DI and the CSL supplement plan (paying by Medisave may allow you to have no cash outlay for the supplement).

While there are some overlap, Disability Income insurance is a more precise way of income protection, whereas CareShield Life protects a person against loss of independent existence. There will be situations where a person loss his income but still about to perform 6 out of 6 ADLs. For example, a teacher or salesperson who loss his voice will most likely loss his current income, but still cannot claim Careshield Life. It should not be a stretch to your dollar since Careshield Life and supplementary plan should be largely paid using Medisave, unless you have bought a mega careshield life supplementary plan. Then maybe you should consider using that money for disability income plan instead.