Several massive changes are happening to the insurance sector on 1 April at once and its coincidence is certainly no April’s fool joke. I wrote about how some insurance providers are replacing existing ISP with full insurance riders from 1 April onwards. On the same day, all Dependants’ Protection Scheme (‘DPS’) policies will also be exclusively administered by Great Eastern (‘GE’). Therefore, I find that my NTUC Income DPS will be administered by GE soon. Even if you are already an existing Great Eastern DPS policyholder, you should continue reading this article to find out how you can benefit from a newly enhanced DPS.
Why Is Great Eastern Administering All DPS?
Great Eastern was the only private insurer awarded the 5-year contract by CPF Board to administer the DPS in a competitive tender. As a result, those previously insured under NTUC Income will have their policies automatically transferred over to GE. As Heartland Boy had previously re-instated his DPS at age 30 after becoming a Dad, he received an email from GE notifying him about the transfer as shown in Diagram 1.
The ever kiasu me even downloaded and logged on to the Great Eastern mobile app to ensure that the transfer has taken place. Alternatively, one may also check the status of his/her coverage and your insurer at mycpf Online Services.
As we go through the changes later, it’s easy to understand why Great Eastern is the sole insurer to administer DPS. By offering the most attractive premiums for CPF members, we can now look forward to a bigger and better DPS.
How Are Existing DPS Policyholders Affected?
1. Higher Coverage (Sum Assured and Age Coverage)
The first positive change is the increase in sum assured from S$46,000 to S$70,000. This is definitely most welcome as a higher payout is required to keep pace with medical inflation (for those diagnosed with terminal illness or total permanent disability) and the general cost of living.
In addition, the maximum age of coverage will be extended from current cap of 60 to cover members up to age 65. This extended protection is most welcome but note that the sum assured for this age band decreases from $70,000 to S$55,0000. This lower sum assured can be attributed to to the common circumstance that this age group are likely to have fewer dependants who are reliant on their active income as their children (if any) would have reached adulthood and capable of earning their own keep.
2. Lower Premiums
With the higher coverage offered, both in terms of sum assured and the age coverage, it will be natural to assume that premiums will increase under the new regime. To my pleasant surprise, premiums will be cheaper than current rates as shown in the Premium Table (Diagram 3).
A reduction in premiums coupled with enhanced coverage effectively means that we are getting enhanced coverage per dollar.
Furthermore, an analysis by Straits Times in 2017 revealed that DPS is cheaper before age 45. I had tasked my financial advisor to remind me to cancel it when I eventually approach that age band.
However, with the revised premiums and enhanced coverage, I suspect that DPS will now be cheaper for an even longer entry age for the assured compared to other term insurance products. This is definitely food for thought for those who are approaching age 45 as keeping your DPS would now get you more coverage for the same dollar.
3) Need To Make A New DPS Nomination
If you have made a prior nomination under NTUC Income for your DPS, please note that you will be required to make a new nomination. I downloaded the nomination form from this url and will be submitting my fresh nomination when it is 1 April 2021.
Existing DPS customers under Great Eastern Life will be pleased to learn that their prior nomination will remain effective.
4) Declaration of Pre-Existing Illness
Do note that even as your previous DPS under NTUC has been transferred over to GE’s administration, the original commencement date will remain unchanged. There is no need to make a health declaration unless:
- Your policy commenced on or before 17 Sep 2005, AND
- You have a pre-existing illness before your policy commencement date which has not been declared
I cannot stress enough that it is very important to come clean on your medical health. There have been plenty of newspaper articles of claims being denied as a result of not declaring one’s pre-existing illnesses. This is a bad outcome for the insured and his/her loved ones as they could have made certain life decisions by relying on the certainty of a guaranteed claim. Furthermore, let’s not forget that this means they would have been paying premiums all these years for nothing!
The DPS has been revised to reflect the current cost of living so that it continues to be aligned to its purpose of protecting members and their dependents during his/her working years. I really like the bigger and better DPS and can see myself keeping it for a longer duration than I had originally anticipated. Honestly, it’s hard to say NO to increased coverage and lower premiums. Two thumbs up to Great Eastern!
Leave a Reply