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Eldershield: Is it really necessary?

Tuesday, August 19, 2014

What is the correct answer to the question?

This was a recent email exchange I had with a reader:

Reader's email:

Hi AK,  
Did you get any private insurance to complement your eldershield?


My reply:

Nope, I didn't. I don't need Eldershield but I gave in to a friend's persuasion to do collective risk sharing. :)

Reader's reply:

Thank you.
I'm a short time away from getting on eldershield. And i'm still trying to decide if i should stay in or hop outa the pool. 

My reply:

Well, insurance should be bought on a need basis.

If we are reasonably sure that we will have enough resources to see us through years of reduced physical capacity, we don't need Eldershield. This is true for me but I decided to help lower the cost of risk pooling for others who might need Eldershield. ;)

First, we should understand what is Eldershield:

"ElderShield is an affordable severe disability insurance scheme which provides basic financial protection to those who need long-term care, especially during old age. It provides a monthly cash payout to help pay the out-of-pocket expenses for the care of a severely-disabled person." Source: Ministry of Health

So, it is a disability insurance scheme and I know friends who bought such insurance to give themselves an income in case of disability, permanent or temporary. However, not everyone needs disability insurance.

Why? We don't need disability insurance because we are Superman (and just have to cross our fingers that we do not come into contact with Kryptonite)?

Source: NTUC Income.

Logically, if we own income generating assets which are able to provide meaningful and regular income streams, we do not need disability insurance. Hence, we do not need Eldershield.

This was what I meant by having "enough resources" in my email reply to the reader.

So, is Eldershield necessary? 

It might not be necessary for some of us but we might want to have it.

Related posts:
1. Tea with AK: Eldershield
(Read the comments too.)
2. Get free medical insurance in Singapore.
3. What is the best insurance to have in life?


la papillion said...


AK71 said...


SMK said...

I think that is a good answer.

further more, some diseases that lead to disability are known to cause cognitive problems even for celebrated people (read the preface in common stocks and uncommon profits by the son of philip fisher on his dad's stock losses after his alzhemiers)

That said, I believe lasting power of attorney (public guardian website for singaporeans) and having a trusted relative is more relevant for AK.

AK71 said...


I like to think that I can trust my family. Crossing fingers. -.-"

AK71 said...

Hi Rebel,

Thanks for letting me know. LP already told me about it. I will let readers decide if my blog post makes sense or not. :)

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