Personally, do you use CPF to pay for insurance? Is this a good approach or should our CPF be only used for our savings since that is our retirement fund? - Seedly
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Anonymous

Asked 2w ago

Personally, do you use CPF to pay for insurance? Is this a good approach or should our CPF be only used for our savings since that is our retirement fund?

I think using CPF for insurance is a less popular option?

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Hi anon,

CPF was first created to assist people with their retirement needs. Over time, the allowed uses of CPF has been expanded to include housing, medical and education needs.

I suppose you could say that if a catastrophic event occurs (such as a major hospitalization), insurance covering the bulk of the costs will ensure that the affect person won't have to dig deep into his/her savings or rely on family support to cope with the huge financial costs. This preserves one's funds for retirement.

Imagine if we did not have medishield life, but instead could use CPF monies for hospital bills. Healthy people would have a lot of monies in their CPF, but those who were unfortunately stricken with a huge bill would have their CPF wiped out. Insurance equalizes this by ensuring those that are healthy would have a peace of mind, and those who were unfortunate to be saddled with a hospital bill would not have their life savings wiped out.

So I would say that using CPF for insurance is in a way buying protection for your retirement funds, and I would thus do so. Furthermore, the idea of not having to pay hard cash is appealing to most people since cash is king.

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2w ago

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Hi Anon,

For insurance, I do use CPF MediSave as part of the funds to plan for my integrated shield plans. This is very essential for us to do as with the current MediShield life scheme in Singapore, we are still subjected to claim limits, and we may not be able to fund for the remaining medical bills with our savings. To gain the sense of assurance, it’s optimal to upgrade our MediShield life.

With the recent changes of having 0% sales charge of CPFIS investment, we can further look into long term investment platforms that can help us potentially outperform the 2.5% returns (CPF OA interest rate) and/or 4% returns (CPF SA interest rates). This will help to better secure our retirement. However, before you embark on the journey of investing using your CPF fund, it is best you assess your risk profile as well as the time frame for the investments.

You can refer to the CPF website for more information: https://www.cpf.gov.sg/members/FAQ/schemes/optimising-my-cpf/cpf-investment-schemes/FAQDetails?category=optimising+my+cpf&group=CPF+Investment+Schemes&ajfaqid=2187051&folderid=11903

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Thank You!
Can you clarify
I wonder if
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What about
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It depends on which account we are referring to. Generally, CPF MediSave Account is reserved for medical expenses. Therefore, it won't contribute to your retirement fund. At the same time, this account allows you to buy a CPF approved integrated shield plan, as well as our nation's new severe disability income scheme, CareShield Life.

More Details:

Next, the main purpose of the CPF Special Account is to build up your retirement fund. Accordingly, you won't be able to use the money to buy any form of insurance plan.

For CPF Ordinary Account, it focuses on retirement planning alongside with some flexibility in its use. For instance, you may use the premium to pay for Dependants' Protection Scheme, as well as for Home Protection Scheme. In the event that the balance is insufficient to pay the premium, it will be deducted from your Special Account.

More Details: Dependants’ Protection Insurance Scheme (DPS) Singapore

Generally, the interest from this interest is able to cover most if not all the premium from the respective term insurance policy. Thus, there is nothing to worry about. Of course, you may wish to do a cash top-up so that the money in CPF remains in CPF for your retirement. At the end of the day, it is how you plan your finances that matters.

I share quality content on estate planning and financial planning here.

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