a primer on eldershield part 1

i have received many queries from readers and especially from my own company's advisors on eldershield or in insurance parlance, long term care insurance.

in response, this is my primer on eldershield part 1 and does not include the eldershield reform of 2007 which will be covered by eldershield part 2.

what is eldershield?
eldershield is a long term care or severe disability insurance scheme and was rolled out by our government in september 2002. eldershield is priced to be affordable and singapore citizens and permanent residents with medisave accounts are automatically covered when they attain the age of 40 years,

how much premiums do i need to pay?
the pricing of the premiums is determined primarily at the age of entry. although the premiums are level (meaning, does not increase with higher attained age), it remains reviewable and non-guaranteed. as eldershield is a yearly renewable scheme, premiums are payable until you reach the age of 65 years. Medisave can be used to pay for the elderShield premiums. should there be insufficient funds in the medisave account, the life insured can also use the medisave accounts of his/her spouse, parents, children or grandchildren. eldershield premiums can also be paid by cash, cheque or giro.

how does eldershield work?
after the certification of severe disability by an appointed assessor which is the inability to perform 3 out of 6 ADLs, elderShield payouts will start but there will be a deferment period of 90 days. the 6 ADLs are listed here but in random order;

1. Washing
The ability to wash in the bath or shower (including getting into and out of the bath or shower) or wash by other means.
2. Dressing
The ability to put on, take off, secure and unfasten all garments and, as appropriate, any braces, artificial limbs or other surgical or medical appliances.
3. Feeding
The ability to feed oneself food after it has been prepared and made available.
4. Toileting
The ability to use the lavatory or manage bowel and bladder function through the use of protective undergarments or surgical appliances if appropriate.
5. Mobility
The ability to move indoors from room to room on level surfaces.
6. Transferring
The ability to move from a bed to an upright chair or wheelchair, and vice versa.

does the life insured need to bear the cost of certification of severe disability by an appointed assessor?
if the life insured's claim is successful, the insurer will reimburse the assessment fee in full. it costs $25 for each assessment (subject to future revisions) if the life insured visit the appointed assessor. the other option is to have the assessment done at the life insured's home and for this, there will be an additional fee of $75 for making the house call.
however, do take note that if the claim is unsuccessful, the life insured will have to bear the cost of the assessment.

why is there a need to impose a 90 days deferment period?
the primary reason is to keep the pricing of the premiums to be low and affordable. secondly, to ensure that eldershield pays out in the event of severe disability for which the life insured will require long term nursing care and suppot.

Does the life insured have to continue paying premiums if the life insured become severely disabled?
if the life insured become severely disabled, the elderShield payouts will start (after the deferment period of 90 days) and any subsequent premiums will be waived.
but should the life insured recover from the severe disability, the eldershield payouts will stop and the life insured will have to continue paying the premiums until the end of the premium term to continue to be covered for the remaining eldershield payouts.

however, if the life insured have received the maximum payouts of 60 months, the plan will discontinue and no further payment of premiums are necessary.


who are the appointed insurers for the basic eldershield scheme?
there are only 2 appointed insurers and they are:

a. great eastern life
b. ntuc-income


for further queriesand or clarifications, u may wish to call up the insurers directly or your financial adviser.

my comments:

since the basic eldershield scheme was launched in 2002, our health minister, mr khaw boon wan (at that point in time), introduced the eldershield reform in 2007 which will be covered in eldershield part 2.