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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.


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?


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. :)

AK71 said...

Reader asked...

Another impt question to ask you is eldershield.

Do u see a need to buy enhance eldershield?

If I go ask finacncial advisor, they will say need.

AK71 said...

PK Jan says...
"if we own income generating assets which are able to provide meaningful and regular income streams, we do not need disability insurance." - if we own only some income generating assets, but may not be enough for disability needs, then we should go with eldershield or even enhanced eldershield for peace of mind?

AK says...
Can like that say also :)

AK71 said...

Kelvin Tan says...
I think most Singaporeans don't regard Medisave as their money, or money they can use. Hence eldershield premiums to them do not impose any real inconvenience to them.

AK says...
Can like that say also :)

AK71 said...

Caroline Ng says...

The eldershield is essentially to provide some minimal monthly income for inability to provide 3 out of 6 activities of daily living?

It’s autoenroll unless u choose to ask cpf to drop it ...Do we need it ?

Asking this question is similar as asking if we need medishieldlife with of coz odds of going to Hospital are possibly even higher .

Truth to be hold, Nobody knows if we were to “strike” that “lucky” lottery . Not like we know our odds for sure. Do I think $400 per mth is enough ? Absolutely Nope .

Hiring a maid to push me around if sh..t 😅 happens will already cost more than that . But the way I look at it, having something is bttr than nothing and one can always choose to upgrade with $600 max allowable limit per yr from their Medisave to get a larger sum payout ..

Unless we have a guaranteed monthly source of income coming from some where .. having that coverage will be important when you most need or least expect it ...end of the day, there are few schools of thoughts and various ways to look at it ...even if one grew their own investment portfolios or passive incomes to be able to self generate aka self insure themselves , why do they still bother to carry on their insurance ?

On contrary, the rich r the ones that will even load up on their coverage (where the irony is it’s Everyday joe who need them the most) ...Because by then it’s all about leveraging and hedging their risks or exposures

AK71 said...

Reader says...

ElderShield proposes severe disability insurance scheme be made compulsory; Govt to administer it

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