4 Ways To Protect Your Retirement Using CPF

As we grow older and start to plan for our desired retirement lifestyle, it is also important for us to understand how to protect ourselves during our golden years.

Insurance plays an important role in any retirement plan. It helps us to recover from unexpected costs and events, and increases our chances of reaching our long-term goals. Having the right insurance coverage during retirement will help you accomplish multiple objectives.

Here are some essential insurance coverage you can pay for using your CPF.

1. MediShield Life & Integrated Shield Plan

As we grow older, illnesses will become a more common part of our lives. We are more likely to visit the hospital and therefore need to have adequate hospitalisation coverage. This is to help us defray any potentially large medical expenses.

MediShield Life is a basic health insurance plan administered by the Central Provident Fund (CPF) Board. It can help to pay for hospital bills and selected outpatient treatments, such as dialysis and chemotherapy for cancer. MediShield Life coverage is sized for subsidised treatment in public hospitals and the pay-outs are pegged at Class B2/C wards.

It is important for us to be familiar with the benefits and pay-outs of MediShield Life so that we are able to ensure our medical expenses can be taken care of to a huge extent.

For those who would like to opt for wider coverage and better benefits, you can consider taking up an Integrated Shield Plan.

For more information relating to MediShield Life, you can refer to this Ministry Of Health (MOH) link.

For more information about Integrated Shield Plan, please seek the help of a licensed financial professional or reach out to us.

2. ElderShield, CareShield Life and Supplements

A study conducted by the Ministry of Health estimated that 50% of healthy Singaporeans aged 65 and above could become severely disabled during their lifetime. The typical costs for a Nursing Home is between $3,000-$4,000 per month while Home care services would cost $1,000 per month. These costs will naturally increase with time due to inflation and may cause a significant strain on our financial position during our retirement.

ElderShield is a severe disability insurance scheme which provides basic financial support to CPF members aged 40 and above who need long-term care. It provides a monthly cash pay-out of $300-$400 to help pay for out-of-pocket expenses up to a maximum period of 5-6 years, depends on which scheme we had joined.

CareShield Life was recently introduced to include younger CPF members and will provide a monthly benefit for life in the event of severe disability. To bump up the monthly pay-out to cater for nursing needs, we can also consider purchasing supplement plans.

For more information relating to CareShield Life, you can refer to this link.

For more information relating to Supplement plans, please also seek the help of a licensed financial professional or reach out to us.

3. Dependants’ Protection Scheme (DPS)

Dependants’ Protection Scheme (DPS) is an opt-out term life insurance scheme that provides a basic insurance coverage for us and our families in the event of death, terminal illness or total permanent disability. DPS was originally started by CPF in 1989 and is now solely administered by Great Eastern Life.

The sum assured is $70,000 till age of 59 and will be reduced to $55,000 till age 65. The premium is paid using our CPF (OA) savings.

4. Home Protection Scheme (HPS)

Home Protection Scheme (HPS) is a mortgage-reducing insurance policy that ensures that CPF members and their families are able to hold on to their HDB flat in the event of death, terminal illness or total permanent disability.

HPS insures members up to age 65 or until the full repayment of their housing loans, whichever is earlier.​ You are required to be insured under HPS if you are using your CPF savings to pay for your monthly housing loan instalments on your HDB flat.

However, HPS does not cover private residential properties, such as executive condominiums (ECs) or privatised Housing and Urban Development Company (HUDC) flats. Thus, for those holding on to these types of properties, you will need a private insurance company’s mortgage insurance to protect yourselves against losing your properties in the event of death, terminal illness or total permanent disability.

You can apply for HPS exemption if you have insurance policies that cover your outstanding housing loan up to the full term of the loan or until you turn 65, whichever is earlier.

Conclusion

Making sure we have adequate healthcare coverage is a critical part of retirement planning. This is so that we would not be financially burdened if we are faced with disability or severe illnesses during our retirement. We could end up drawing a much bigger amount than expected from our savings and retirement funds to pay for care and treatment. Our loved ones may even have to step in to cover our financial shortfall. Therefore, it is vital that we plan adequately to reduce the impact of such unfortunate circumstances.

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