Bigger payouts over longer period for new ElderShield
Premiums just slightly up in revamped version as insurer Aviva joins inBy Salma Khalik, Health Correspondent
ELDERSHIELD, the national severe-disability insurance scheme for those over 40, will give policy holders bigger payouts over a longer period - at only slightly higher premiums.Policyholders who turn 40 on or after Sept 30 will automatically get on this new basic ElderShield scheme.
If they become severely disabled, they will get monthly payouts of $400 for up to six years - up from the current $300 a month over five years.
The new potential payout is $28,800, 60 per cent more than the current $18,000. But premiums are only 15 to 30 per cent higher.
The 750,000 existing policyholders on the five-year-old scheme will not be left out: They may choose to stay with the current scheme at the old premium and payout rate, or switch to the new one by paying an adjustment fee and the new premiums.
The adjustment fee will vary with age. Policyholders will be sent letters about how much this will be for them.
This change comes as part of a revamp of ElderShield, aimed at giving an ageing nation of policyholders more choices in coverage plans to suit their needs and their means. All policyholders will also be able to pick from a menu of ‘add-on’ coverage - with additional premiums payable - to customise disability plans for themselves.
Along with the revamp, a third insurer, Aviva, has joined NTUC Income and Great Eastern to sell ElderShield plans. Its competitive bid was instrumental in setting the new premium and payout rates. NTUC Income and Great Eastern will match these rates come September, when the Health Ministry’s new contract with insurers begins.
ElderShield cover is automatically given to Central Provident Fund members when they turn 40, but anyone can opt out then. Premiums pegged to the age at which people join are paid yearly from their Medisave accounts.
Policyholders stop paying premiums when they start getting payouts from a claim; they also stop paying premiums at age 65, although payouts will still be made if disability strikes at any time for the rest of their lives.
The payouts kick in when policyholders become unable to perform at least three of six stipulated daily tasks.
A member of the Government Parliamentary Committee for Health (GPCH), Dr Lam Pin Min, urged people to switch to the new scheme because of the ’significant improvement in the payout with a nominal increase in the premium’.
Following a visit to the Peacehaven nursing home yesterday, Health Minister Khaw Boon Wan said that his ministry would reward Aviva for its competitive rates by giving it half the new cohort of those who turn 40; the other two insurers will get 25 per cent each.
All three insurers will offer the supplementary schemes which, for extra premiums, could offer higher payouts, payouts over longer periods or under less-stringent definitions of disability.
Premiums for these add-ons can be paid out of Medisave, but policy holders may only draw on Medisave for up to $600 a year for these. Amounts above this are to be paid for in cash.
Madam Halimah Yacob, who heads the GPCH, cautioned against spending too much on add-ons. Mr Khaw agreed, saying that, for himself, a policy yielding about $1,500 a month for 10 years would be enough.
No cap has been imposed, however, on the amount of Medisave to pay the premiums for the basic scheme, which can be as high as $3,130 for a woman joining it at the age of 64. The premium is high because she would only pay it twice, until she reaches 65.
Mr Khaw said it was therefore advisable to join ElderShield at age 40, while annual premiums are at about $20
Source: The Business Times, 20 June 2007
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