Change is Coming

Here are some changes that are happening this year.

1. LIA definition of CI

Starting from 26 Aug 2020, any policies with CI benefits signed will be under the new framework. The changes sound severe, but LIA has clarified that “the changes made to the Critical Illnesses’ definitions and names are meant to express the intent of the coverage with greater clarity, so that customers do not misunderstand what is being covered and what is not. There is no change to the intended scope of coverage, when compared against the definitions of 2014.”

In essence, the clarification is to make clear the intention of the coverage. For example, here is a comparison:

In the initial framework, the critical illness stroke was merely titled “Stroke” while the 2019 framework had it revised to “Stroke with Permanent Neurological Deficit”. While it does sound like a severe change, do note that reading on the full definition of the 2014 framework, you read:

(extracted from LIA)

So the words permanent neurological deficit was already in the 2014 framework, but now it has been highlighted. That is one of the changes.

We do not intend to discuss the differences of the revised framework; as you can see, they are technical and best done face to face for greater clarity. What we will add though is everyone should, as a matter of habit, always review their insurance plans with their advisor regularly to ensure that their protection needs are met. Even without the changes in the framework, your insurance needs might be under provided for.

2. Eldershield changing to Careshield

Initially scheduled for mid 2020, the change itself has been changed to end 2020, with some aspects of it delayed to end 2021. This is due to Covid, the main event of 2020. Careshield1 life, a long term disability care (which you can read about here) is a critical element of our insurance portfolio as we are a generation who will live longer, but not necessarily well nor independent.

In essence, Careshield is designed to help you mitigate the increased cost of living when disability strikes. In the scenario, disability results in the insured requiring someone to assist them in day to day life. Careshield is not an insurance that covers specific medical conditions but rather a physical condition; the situation where you are no longer independent and require assistance in your day to day activities.. The costs of such an event can be severe, as it tends to be long term and drawn out.

The key benefits of Careshield:

a. The payout is lifetime which will help protect our financial health when we are severely disabled.

b. The payout amount varies (see below for explanation)

c. Mandatory for anyone born after 1980, and enrollment happens at 30 years of age. Opting out not possible for anyone born after 1980.

d. The government will ensure that people will get cover even if they can’t afford the premiums. Singapore does not leave her poor behind.

e. Medisave can be used to pay for the premiums.

Careshield payouts will increase as long as the insured does not claim and is under 67. This ensures the protection will be meaningful as we age. Do note that the coverage is good enough only for basic coverage (the government intends to ensure basic needs are met) and nothing more. Enhanced coverage allows you to ensure that you are able to finance a better environment should you need it.

In contrast to Careshield, Eldershield works slightly differently.

a. The payout term is 72 months, i.e. 6 years.

b. The payout is fixed at $300 or $400 a month (depending on when you entered the plan; the older version was $300).

c. Automatically enrollment once the individual reaches 40. Opting out is possible.

d. No support by government.

e. Medisave can be used to pay premiums.

In this case, the improvements in the plan, from Eldershield to Careshield, help to provide greater assurance for people who encounter such scenarios. When disability of this sort strikes, it is not a good position to be in. While money cannot buy good health and protection against such events, it can at least ensure a certain level of financial protection. It is worth reiterating that whether Careshield or Eldershield serve only to provide basic needs.

3. The world, the plans. The reality

It is safe to say that all plans for 2020 changed, the gloves came off as the world unravelled early in the year. Economies grumbled to a halt; airlines stop flying. Trade has dried out. As recently as December 2019, some of us were planning our holidays to far flung locations. This year, the furthest most of us will travel to is Pulau Ubin. Even BMT was done at home.

Today, the idea of “TraceTogether” and “Safe entry” are constantly on our minds. Today we wear masks as part of our attire, our fashion. Today, a fever is seen as a potential nightmare and reason to decline entry. Zoom has become a way of life (though if you intend to invest in zoom, do be careful. The stock with the ticker tape ZOOM is not the Zoom company you are thinking of; the company Zoom that does all the meetings has the ticker ZM. The stock with the ticker ZOOM is zoom technologies, which is a Chinese holding company. Don’t worry many people made the mistake. Do note, this is NOT advice to buy; we just want you to be careful of what you do.)

The changes to the world economy seem permanent. Nearly every aspect of life is being re-evaluated, including work. If work from home is a reality, are we prepared for the new challenges (if you can work from home, that means your work can be done remotely. Anywhere in the world. Facebook is starting to let their workers work from anywhere in the country; would it be too big a leap to hire talent from overseas but still ‘in’ the office?)

Change

As you can see, 2020 is turning out to be a year of change. But to be fair to the year, change happens all the time. Change is ironically a constant. What is scarier is change is usually big. Change creeps up on you, and pounces with all its glory. Change is forced upon us. We have no say. LIA changes, Eldershield, Travel Bans, Masks, Work. Transitions are here to stay. Even without Covid, changes were already happening.

What then can we do for our own lives? We cannot affect change; we can only respond to change. What we can do is adapt and adjust to make the best use of the new challenges. Treat change as an opportunity to grow stronger. Build your financial health to be able to deal with changes, a future proof financial plan.

Our lives are transiting; and will continue to transit. Money goes in motion when life goes in transition.

Enjoy reading? Tell us what you like about it and what would you like to learn more.

1 refer to https://www.careshieldlife.gov.sg/ for more information

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