Asked on 29 Oct 2020
I would highly encourage you to get the enhancement for Careshield Life (CSL).
CSL is meant to provide for your long term care needs. These range from your nursing home costs to specialized care settings, etc, in a scenario where you cannot do 3 or more out of the 6 activities of daily living. The coverage is for life and it also makes sense as it is more likely that in retirement and old age, one suffers from some kind of disability that greatly interferes with your daily life.
CSL, while providing a lifetime payout, only pays $600/mth. If you feel that is enough today, then you don't have to do anything. But in today's context, that is barely enough for a maid, let alone nursing home care. Even with the 2% escalation in payouts, we're looking at maybe a $1200/mth payout after age 67, 37 years from now. By then, costs would have increased from today as well.
We're really just playing catch up. Thus, getting your CSL payout increased with a supplement plan (say, another $1000/mth extra on top of CSL) will ensure that you at least have $2200/mth if something happens after age 67. While that may not be enough by then, it is definitely a step up from $1200/mth. More importantly, if you are young and healthy now, you won't have any issues getting the suppplement plan, because you are still insurable. When chronic conditions like diabetes sets in, you won't be able to get any supplementary coverage at all.
The risk of not buying, is just that if you have to claim, you will only have CSL to fall back on. The risk of buying, is that if you don't claim, the premiums will just go to the insurer's risk pool to pay out to those who have to claim, which is how insurance works in the first place.
In conclusion, you should exercise your option to increase your payout now, when you are still young and healthy. Medisave can be used for this (up to $600/yr) which won't impact your cashflow, even if finances are tight. Medisave money cannot really be withdrawn, and there are caps on what it can be used for. CSL and supplement payouts are in cash, which gives you flexibility on how you want to deploy it.
CareShield Life is a new government-run disability insurance scheme that seeks to offer basic financial protection against severe disability. Compared to its predecessor, it has an increased payout of $600 per month, in the event that you become severely disabled. This will increase every year to keep up with inflation.
Depending on your financial situation, the $600 payout may or may not be sufficient. However, it seems to be a small amount to pay for all your living expenses, mobility equipment, and home-based care. For those with dependents, it will almost certainly be insufficient to cushion against your loss of income. CareShield Life supplement is aimed to help bridge this gap.
There are currently 3 insurers providing CareShield Life Supplements. These are disability insurance plans that complement and augment the basic CareShield Life plan. This is aimed to enhance your coverage such as high monthly payouts.
Aside from higher payout, upgrading your CareShield Life plan also allows you to claim for the benefit should you be unable to perform at least two (depending on the plan) of the six Activities of Daily Living (ADL): washing, dressing, feeding, toileting, moving around and transferring. For Careshield Life, the criteria for payout is the inability to perform at least three of the six Activities of Daily Living (ADL).
Feel free to get in touch with us if you are interested to find out more.