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Tea with AK71: Eldershield.

Thursday, September 22, 2011

I am quite aware that I am ageing and, once in a while, I am reminded of the fact by other people.

Today, the government reminds me of this same fact by sending me a notice saying that I would be automatically insured under Eldershield come 31 December 2011.

Eldershield? Me? Wow, elder. This is cheerful.

So, being Singaporean, I want to know "how much"?

Annual premium: $174.96, payable till age 65.
Total premium from age 40 to age 65: $4,548.96

Second question, "what are the benefits"?

Benefits: $400 a month payout (maximum lifetime limit of 72 months).
Maximum claimable: S$ 28,800.00
Lifetime coverage.

OK, next question is harder. Do I need this? I mean is this really necessary? Opinions, anyone?

63 comments:

Kelvin said...

Assuming you are able to reap 10% annual gains from your shrewd investment plans, you would end up with $17207 from the annual premiums alone. Even at 8% annual returns, the final sum would be $12791. (Hope my calculation is right...)

That is a sizable sum for an insurance that can pay out a maximum of $28.8K. Furthermore, $400 sounds kinda paltry to me.

More importantly, that $400 should be less than small change to you. Haha.

AK71 said...

Hi Kelvin,

I am somewhat confused as to how you got the sums of $17,207 and $12,791. I have always been poor at Math.

However, if that is all I am able to get if I were to invest the annual premiums, I could be better off buying this policy.

Of course, this is assuming I would max out the benefits and take back $28.8K. Then again, who buys insurance hoping to max out the benefits? Haha.. ;p

I must disagree that $400 is small change to me. It is enough to pay for my meals for a whole month and still have some money leftover! ;p

However, I must say that $400 a month is really too little to be meaningful in case of severe disability. :(

To buy or not to buy?

Anonymous said...

Mr Elderly!

Gosh it still feels quite cool if you couple it with the few strands of white hair doesn't it? ;)

It got me thinking since it will be in a few years when I get mine too! Cheerful indeed as you say!

Here's what I think: Since the $28.8k is paid out over 72 months the initial value is prob closer to $22k (assuming you put it into SGS bonds for a 'safer retirement', and the current ones stand at ard 0.75% indicative yield)

That means I will need to generate 11% annualised to beat these returns!

Assuming I am still around during the 26 years + 72 months that is ;)

Blackjack

AK71 said...

Hi BJ,

OK, took me a while to digest what you have said. You are working from the angle of the benefits offered while Kelvin was working from the angle of premiums to be paid. Hmmm..

So, do you think this Eldershield is a good deal? Would you subscribe to it if you were in my shoes?

As for being a cool elder, I think that idea is totally lost on me. Hahaha.. ;p

la papillion said...

Hi Ak,

My opinion is that u should buy. Firstly, it doesn't cost much, so 400 per month (should be claim out) is sufficient to hire help to take care of u. Of course u can argue that your passive income is more than sufficient to create your own elder shield, but this is just extra protection at low cost. Secondly, I wish to appeal to your sense of public charity - help contribute to the pool of money so that those poor elders can insure against this risk at lower premiums. These people do not have passive income at all, most likely.

So how? :)

Anonymous said...

Ah, realised my calculations was slightly erroneous and I should have obtained higher than $22k instead :)

Well, if its me, I would probably subscribe. No harm right? :)

Blackjack

KT said...

I think you should look at the clauses first before you decide.

AK71 said...

Hi LP,

I recommend you to the government as their official spokesperson for Eldershield. Any decent person would not be able to say "no" to you! It is your statement about being charitable that got me! ;p

So, think of Eldershield as a charity? OK, I can do that. I donate more than $174.96 annually to my list of chosen charities anyway. :)

AK71 said...

Hi BJ,

No harm indeed. In fact, LP thinks it would do many people a lot of good. It is looking at Eldershield from a less selfish angle. I like it. :)

AK71 said...

Hi KT,

Yes, I have gone through the booklet they sent to me. ;)

financialray said...

Hi AK

I went through the same thing earlier this year.
Initial thoughts were the same " Do I really need it??"
Then the same thought as LP's reasoning came through and the decision is to flow through path of least resistance. Simply put, too lazy to take any action. LOL
It is an opt in thing right?
Later insurance agents will come hounding you to upgrade. From NTUC, AVIVA..la.

AK71 said...

Hi financialray,

You are a fellow pig and in the same cycle? I don't know why but I always had the idea that you are much older than me. ;p

Eldershield is an automatic inclusion scheme. By doing nothing, we are included. We can opt out of the scheme.

I just spoke with my mom and she is telling me to opt out like she did. Oh, my ears....

CreateWealth8888 said...

This part of social insurance scheme of opting out, my wife and me are in. Just treat it as give back to society.

$400 is some change to many; but for some needy ones still money to them.

AK71 said...

Hi CW,

Oh, $400 is money to me, for sure. No doubt about that. ;)

Anonymous said...

In my view, Eldershield is worth subscribing to. Nowaday, it seems that the probablity of you living > 72 years old is higher.

With annual premium of $174.96, you will need to achieve minimally annual return of 11.7% to outbeat the max premium of S$28.8k.

Regards,
PS

Anonymous said...

Ah... the other humanitarian aspect of social insurance schemes and the benefits that are often brought in to substantiate such schemes... good angle as well.

But... does opting in or out really affect the payout for the more needy? Or does the premium paid go further into such causes if one chooses to use it in other ways other than this?

Blackjack

AK71 said...

Hi PS,

I agree that this looks like a low cost insurance policy worth getting especially if we should max out the benefits.

Severe disability means not being able to do 3 of these 6 things: washing, dressing, feeding, toileting, mobility and transferring.

It might be insensitive to say this but, frankly, if I were to meet the conditions to claim the benefit of $400 a month, I would rather be dead. :(

AK71 said...

Hi BJ,

Very good question. Yes, what is claimed and what is done could be very different.

Since LP was the one who threw in the idea of social responsibility, I will leave it to him to see if he has anything to say to you. ;)

Anonymous said...

Haha AK... don't start a war!

I just thought that premiums were being determined by the actual mortality rate, instead of the insurance base... so if that's the case, unless we are confident that we are way healthier and luckier than the needy ones, and will never need to make a call for payout, otherwise we may end up jacking up the premium for them instead! Ha ha!

Unless we are saying we will never call on the insurance for payout even if xxx. Now that's different :p

Blackjack

Singapore Man Of Leisure said...

Hello AK,

I am with LP and CW8888. If all the financially literate ones all leave Eldershield and do their own private insurance, the insurable pool will go down. Premiums will increase for the rest of us. I vested interest! So opt-in! LOL!

By the way, I know it's your blog, but I hate it when people younger than me say they are ageing... I am now undergoing my "lao hero" phase... Buying clothes that are too young and tight for me... Grasping my last straws of youth!?

Forever young!

AK71 said...

Hi BJ,

A war? Never! Haha.. This is like a forum. Very civilised. ;)

On a more irreverent note, I wonder if I were severely disabled and unable to do at least 3 of the 6 things in order to make a claim, would I still be able to go online to fill up the form to do so. ;p

Anyway, I am still waiting for LP to give us his take on your comments. ;p

AK71 said...

Hi SMOL,

You bluff me never go school. You not financially literate? People younger than you cannot age?

Anyway, you are only a few years older than me. You're not old lah, just older. ;p

Wearing tight fitting clothes meant for younger people is very unglam lor. Buying them now is even more unglam. ;p

My clothes are all loose fitting except for those I bought many years ago when I was younger and leaner.

So, I also have clothes meant for younger people but only because I bought them when I was younger. ;)

Jared Low said...

Hi AK,

Over the past 12 months, I have been trying to get my parents insured under eldershield and its supplement.

Besides the regular H&S shield plan, they dont have any other insurance.

If there is an insurance plan that I can get them covered without paying big bucks to the insurance company, it will be Eldershield and its supplement.

With all its premium paid via medisave, at their late 50s, they could get monthly benefit of about $1000.

Lucky for my mum with hypertension, she got it covered. As for my dad, his case was postponed because he was suspected with diabetes.

I will be happy if they dont claim anything. But if it really happens, we can make necessary life adjustment without big $$ losses.

Speaking as the middle child, I got to consider how long term disability would affect my parents, my brother and his going-to-be wife and my sister who is still studying.

AK71 said...

Hi Jared,

Thanks for sharing your thoughts on Eldershield.

It is interesting that you would actually increase coverage for your parents to get more than the usual $400 monthly benefit in case of a claim.

Food for thought indeed. :)

Kelvin said...

If annual return is 10%,

Year 1: $174.96
Year 2: (174.96 x 1.10) + 174.96 = $367.42
Year 3: (367.42 x 1.10) + 174.96 = $579.12
and so on...

I anyhow hantum one, so don't quote me hoh. Haha.

I personally don't like Eldershield because you have to be really disabled to qualify for it. Even in the very unlikely event of severe disability, one may not live long enough to claim the full sum. So I would rather look at other more expensive plans which provide coverage for more "likely events or conditions".

Eldershield sounds a bit misleading, maybe they should call it Superdisabled Shield. :p

That said, I like the altruistic reason of opting in Eldershield. If AK takes up the plan and not make a single claim, he is effectively subsidizing the rest of Singaporeans!

Anonymous said...

from the perspective of someone with a severe disability - take up the eldershield!!
1. every little helps... it doesn't matter if u got a few $mil and receiving passive income.. $120k/yr is not very much... trust me..
2. its not charity... its a pay-it-forward sort.. and with the type of advance medical technologies we have in the hospital, the elderly more often survive with less function than actually dies... my wife specialised in critical care medicine.. trust her...
3. want to die instead? haha... u would be surprise how resilient the human body and mind is to terminating itself... trust me...
also - see #2
4. its from your CPF... u think you'll ever get to actually touch that monies

so take up the damn eldershield!!
too bad its not applicable to me...

tw

AK71 said...

Hi Kelvin,

You are so right about the name. Should be "Super Disabled Shield". ;p

Yes, I also thought about how it is probably quite difficult to make a claim.

However, I remember my maternal grandmother who was paralysed and bedridden for five years before passing on.

She could have benefitted if she had Eldershield but she suffered so much in those five years and the rest the family shared the pain. It is definitely not about money.

They should legalise euthanasia. If I should suffer from at least 3 of the 6 things listed to be classified as severely disabled, I would prefer to die.

AK71 said...

Hi tw,

I am sorry to hear that you have a severe disability. :(

If $120K in annual passive income is not a lot or enough if I should suffer from severe disability, would an additional $400 a month make much of a difference?

Yes, I am not worried about dying. I am more worried about not dying if I should be very sick. This is why I am heavily insured against critical illnesses.

I have more or less made up my mind not to opt out of Eldershield for whatever reasons, altruistic or not. Not telling my mom. ;)

Anonymous said...

yes, u r right.. 400 wouldn't make much of a difference
but, its still $$ nonetheless.. and more importantly, its another source of income..

euthanasia?
i'm just glad there wasn't and isn't an option or i wouldn't have discovered this exciting game 13yrs ago.. its called the "stock market" :p

and just for future reference - once u or a loved one dial 995 for an ambulance, u no longer decide whether u get to die or not


ps - nothing to be sorry about
life give u lemon... blah blah.. lemonade..
doesn't hurt if there's more $$sugar for the lemonade :p

tw

Singapore Man Of Leisure said...

Choy!

I wish you heng heng and good health AK!

Ssssshhh. We won't tell mom too ;)

(Getting your back for laughing at me. I don't care. Orbid or not, I hero all the way!)

Anonymous said...

Hmm.. guess i'm mislead with the names of Eldershield. I have the impression that i can get $400 per month once reach ages of 65.

If one must be super disabled to get the benefit, then in dollar and term wise, i don't think it is worth subscribing. Unless you are looking from the perspective of doing charity to the poor though.

PS

AK71 said...

Hi tw,

13 years ago? Wow, I guess you are an example of how one could continue with life even with a severe disability.

So, the Eldershield program would benefit people in your shoes if they had it back then.

Your positive disposition about life with disability is encouraging. I appreciate your sharing very much. :)

AK71 said...

Hi SMOL,

Kamsiah hor.

So, did you opt out of Eldershield or not? ;p

AK71 said...

Hi PS,

Yup, you might have mistaken it for an annuity or something. ;)

It is another Shield program. It pays out in case "elders" suffer from severe disability. :)

financialray said...

Hi AK

Heavily insured against CI ?
But if you have no dependents and you are single, then maybe hospitalisation plans more relevant?
Think CI only can claim if dying soon or dead already and the money goes to the dependents.

Anonymous said...

and i enjoy your blog postings
pls keep it going

cheers
tw

running man said...

your mom seems determined to persuade you to opt-out, why ah? she doesn't trust the gahment? :)

as for treat it like charity for the poor, I personally lost faith with state-run "charities" after the NKF and Ren Ci saga.

AK71 said...

Hi financialray,

You are mistaken. CI policies will not pay out if we die right away from, for example, a heart attack. We have to survive in order to make a claim.

So, we buy CI policies in order to help defray the costs of treatment. This is especially crucial in our more productive and younger years as being stricken by a CI would be a double whammy of losing income on top of paying for medical expenses.

There are more expensive CI policies available now which pay immediately upon diagnosis of illness instead of making us wait.

Do you have CI policies?

AK71 said...

Hi tw,

Thank you for the encouragement. :)

AK71 said...

Hi running man,

My mom thinks it is a waste of money and she thinks that it will be very hard to get any money if we ever have to make a claim. Sounds familiar? ;p

She also says I don't need the money. OK, case closed. Mommy's word is final. ;)

CreateWealth8888 said...

Sometime, in life, don't count every cents.

AK71 said...

Hi CW,

I assure you, I am not the count every cent type of person. Really, I'm not. ;)

mark said...

Premiums made via medisave?

Is this yet another way for them to collect money back from our cpf accounts?

AK71 said...

Hi Mark,

I was wondering just for a few seconds whether to publish your comment. I hope my blog would not get gazetted because of this. ;)

Anonymous said...

Hi AK, do check with an insurance company for enhanced version of this. Recently, I was speaking to my agent from GE and they have recently launched an enhanced version which makes it easier to 'qualify' for the claims - ie only 2 out of the 6 criterias instead of the standard 3 out of 6.

Statistically, that will seem to vastly improve the 'yield' of your paid premiums when the time comes .......

Welcome to the elderly club. LOL.

AK71 said...

Hi Anonymous,

Enhanced version? Yikes! No. I am not even all that interested in this policy. I think I will just go with what they have sent me.

So, I guess you got the enhanced version?

Could you include your name or initials in future comments? Thanks.

la papillion said...

Hi people,

Hmm, seems like I have to stand out to clarify my statements. I'm not an actuary, but I believe that the larger the insurance pool, the cheaper will be the overall premiums. Of course, premiums will also differ due to age banding, but the effect of a larger insurance pool will lower down the premiums across all age bands. Some of the fixed costs of running the insurance (advertising, administrative etc) will be spread out over a larger pool of people, hence lowering the cost of any one individual. All these benefits from economies of scale could be passed down to the beneficiaries.

At least that's what an ethical insurance company would do.

PanzerGrenadier said...

Hi AK

I opted out of Eldershield.

The claim requirements are somewhat onerous. You need to be in very bad shape to be able to claim:

---MOH website----
For ElderShield purposes, “severely disabled” means unable to do at least 3 of these 6 activities of daily living – washing, dressing, feeding, toileting, mobility, and transferring. See section on the “Definition for Disability” for details of what “severely disabled” means.

The premium is not a fixed amount, it increases every year with age.

http://www.income.com.sg/insurance/eldershield/premiumreform.asp

After reviewing the definition of disability and premiums and the "auto opt in unless you out" nature, I decided to opt out of this scheme. Interesting to note that the take-up rate is low.

financialray said...

Yes,
I have a few CI policies but perhaps only a heart attack can allow us to claim while still surviving. The claim for cancer does not sound so good as the cancer must have reached certain late stage.
I checked out the latest CI bought and they even consider angioplasty to keep up with heart attack cases.

AK71 said...

Hi LP,

Thanks for the explanation. :)

Hi Panzer,

The premium is not fixed? I thought it is.

If it increases with age, then, it is definitely not worth it. The monthly $400 benefit does not increase with age. :(

Hi financialray,

I guess it is never easy to make an insurance claim. :(

Jared Low said...

Hi AK,

Just to clarify, the Eldershield premium is determined by the age of entry and does not increase with age.

As for CI claims, one of my colleague got diagnosed with stage 1 breast cancer, got to remove the breast because the cells are invasive.

She claimed closed to half a milliion in CI, thousands of premium waived off for her 4 children's education plan.

She is healthy. So not necessary that extreme as it seems.

Regards,
Jared

AK71 said...

Hi Jared,

Thank you so much for your input. I remember reading that the annual premium is determined by age of entry but I wasn't sure. :)

As for the CI policies I bought, if there should be any updates, please remember to keep me in the loop. ;)

Jared Low said...

Hi AK,

Of course. Definitely. Do let me know if you have any queries too.

Regards,
Jared

Singapore Man Of Leisure said...

Choy and more choy!

I wish everyone heng heng and super good health!!!

Where got people buy insurance and wish they can make a claim one?

Insurance is where the majority get peace of mind but "lose out", while a minority get more than what they have contributed to the fund.

I don't know about you all, but I hope to contribute and never get anything back! I huat ah! No claims ever! I should be so lucky!

I guess everyone wants to look-out for themselves first, and then complain that garmen not doing enough for the less priviledge...

I am with CW8888. I don't have millions, but I feel rich. I don't have worry about $400 payout thingy.

If financial literacy is all about mind calculations, then I am not literate.

Yes, I got Eldershield. Solidarity with my fellow HDB heart-landers.

AK71 said...

Hi SMOL,

Wah! If you were ever to be a politician in my constituency, I would surely vote for you!

If I did not get persuaded by your substance, I would be persuaded by your words!

You are a wordsmith. :)

patrick lim said...

hi,

with regard to yr query, let me share from my own very personal perspective with regard to my dear beloved mum who left us when she was in her late 70s.

as the eldest son in the family, i took care of almost 100% of her bills which started when she was diagnosed with diabetes. unfortunately, her health degenerated more than 2 years later culminating in kidney failure and ultimately, her untimely death, a further 24 months down the road.

prior to this, she was always as strong as an ox all the years of her life and never once was she ever been admitted to any hospital nor had any single episode of being an in-patient. moreover, visits to the doctor's clinic was a once in a blue moon affair.

when she couldn't perform the (DLs) activities of daily living, i had to bring in a domestic helper to assist her to do the things we take for granted, like eating, drinking, dressing, showering, etc.

all in, we incurred almost $2,000 in monthly expenses, without factoring doctor's visits, hospitalisation, medication, etc.

therefore, the current eldershield scheme is simply an entry level one with a $400.00 monthly benefit payable for up to 6 years.

when mr khaw boon wan was our health minister, he accepted that the eldershield scheme will need to be enhanced and he mentioned tha this could be raised to between $800 and $1,000.

source: http://www.asiaone.com/News/AsiaOne+News/Singapore/Story/A1Story20110504-277012.html

another possibility is to bring down the cohort entry age to either 35 or even 30 from the current age 40 years.

so do watch out for these probable enhancements to be implemented come august 2012.

just my 2 cents' worth.

AK71 said...

Hi Patrick,

Thank you so much for sharing your personal experience with us.

$800 or $1000 a month would be more meaningful although I am not sure that starting from age 30 would be well accepted.

At 40, I am beginning to feel some aches and pains. There is greater immediacy, I suppose. ;p

cheated.22 said...

Be careful guys. I signed up with great eastern on this eldershield.
Told them I have hypertension, they said...ok lah. No problem. I got hospitalized for hypertension and was glad that I signed up with ge. But you know what happened?
It was supposedly automatic in the claims process. They got the hospitals alert I guess, but after a couple of months and their "investigations", they arrive to a conclusion.

No reimbursement for me! And they canceled my policy!!! And reimbursed my CPF deduction.

Can any one in the legal industry advise?
I don't want this to happen to fellow 40++ year olds. I felt so cheated, and they made me feel like an insurance fraudster!

cheated.22 said...

My experience with eldershield is different. Be careful, I signed up in April. Told the agent that I have history of hypertension. Agent said ok...NP.
So....onzlah...since the premiums are paid off the interest from the medisave acct.
I got hospitalized in July for extensive hypertension. Hospital alerted insurance, I said to myself...lucky got insurance covered.

Follow up with the claims, they said investigating.....
Suddenly, I received a letter that my policy has been cancelled. And they reimbursed my premium payment back to my CPF. No reimbursement of the hospitalization fees.

Please advise if they can do that?
What's the point of eldershield when insurance company did this. I will like to avoid such occurrence with fellow 40++ year olds who were approached by insurance agents eager to grab this opportunity and increased their sales fighures.

AK71 said...

Hi cheated,

I think you might have mixed up Eldershield with H&S policies like Medishield and Incomeshield. For Great Eastern Life, they are called SupremeShield and TotalShield.

I am not an expert in the area of insurance. So, let's see if readers who are in the know are able to comment on your experience. :)

If I misunderstood, please let me know. Thanks. :)

Jared Low said...

Hi Cheated,

Just to clarify the purpose of ElderShield and MediShield plan.

ElderShield is a long term care policy that pays out a fixed benefit in the event insured is unable to perform 3 out of the 6 daily activites, e.g. feeding, toileting.

MediShield is a hospitalisation policy that reimburse the medical expenses incurred during inpatient treatment.

From your example, hospitalisation due to hypertension should activate MediShield instead of ElderShield. Therefore, no benefits will be paid out from your GE ElderShield.

I have seen Policyowner being kicked our of the schemes when they did not declare their health condition at the insurance application stage when a claim is made.

You are right about the automated claim process. The hospital will notify the insurance company and they will assess your medical reports to process the claim.

And since your medical report proves that you had hypertension prior to the start of the policy, and the nondisclosure of your health condition would have alter the acceptance offer of it, hence they cancel the application and refund you the premiums.

Winston Koh said...

Hi cheated.22,

I believe you are referring to Private Integrated Shield Plan, not Eldershield. The former covers hospitalisation expenses, the latter covers severe disability during old age. Read through the benefits schedule and you will understand the distinction.

Every insurance policy requires the applicant to go through an underwriting process to determine if he is a suitable risk to the insurer. The general guideline is that "If you are not sure, declare". Your case is an unfortunate one because the agent is more concerned in earning the commissions than to do a good job for his client.

The insurer has the right to reject your claim because you did not declare your condition on the proposal form. Had you declared, the insurer would have placed this as an exclusion (can't do claims related to hypertension) as it is a pre-existing condition. The end result would be the same if you declare: cannot claim on hypertension.

About legal recourse, do check with a lawyer on what you can do. Otherwise, you can write in to FIDReC about what happened.

Moral of the story for AK71 readers: Insure early (upgrade your MediShield plans) while you are still healthy, fit and strong, not when you are LKK (Lao Kok Kok).

AK71 said...

Hi Jared and Winston,

Thank you very much for taking the time and effort to write such detailed replies.

Much obliged. :)

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