Insurance at 65

Insurance at 65? -?

The age of 65 represents the cusp of retirement. Insurance coverage that can be bought is limited and expensive. How do we make costs affordable and which kind of coverage is available?

TL:DR : Despite increasing premiums age 65 onwards, premiums can be maintained by proper planning.

1. Your existing cover

At 65, your DPS is expired. The remaining cover using your CPF would be your private hospitalization by Medisave. Eldershield or Careshield by Medisave. HPS by CPF OA if your house isn’t paid up. Evaluate your existing cover to identify gaps.

2. Insurability Are you in good health?

Symptoms from high blood pressure and high blood sugar might creep up at this age. All insurers in Singapore have withdrawn the moratorium process. The moratorium allows a person to insure without declaring health issues, subject to a 2 to 5-year waiting period where the person cannot go for check-ups or contract an illness, or else the illness be ruled as a pre-existing condition.

3. Availability of plans

Most plans such as hospital cash or accident plans cannot incept a person beyond the age of 65. Term death or critical illness policies will be exorbitant due to the higher risk of claims. So what can a 65-year-old who hasn’t taken up any policies protect themselves for?

4. Priority coverage

As a 65 year their priority must be the cost of hospitalization. A broad aspect of cover should be implemented. The clinic or hospital is the first point of contact for illnesses. If we can defray the cost of treatment, it leads to a healthier retirement portfolio.

5. CPF Life is the best annuity in the Singapore market.

It allows a 65-year-old, 6%- 7% monthly cash from a lump sum. Instead of 4% interest earned in the Retirement Account (RA), to sustain new policies - money can be diverted from RA or transferred from the immediate family’s Ordinary Account. This means at 65 every $20,000 added into CPF life, they would receive a little more than $100 a month.

An example - Noorma is without any insurance at age 65. She has no recurring medical conditions. Normal Body Mass Index and regularly working a full-time job, with the expectation of retirement soon.

A hospitalization plan has 2 components - The main plan payable by Medisave and Cash rider to defray final bill. Applying for a 4-bed public hospital tier will cost about $300 by Medisave and $250 in cash. Premiums will increase and will be managed under the $ 100-a-month budget.

For planning, the Medisave portion will not be calculated as long as it is below the Additional Withdrawal Limit.

Hospital expenses don’t just stop at the bills. The taxi costs, change of appetite - eating other than bland hospital food and loss of income is all out of pocket.

A hospital cash policy is recommended. It pays out $100 a day if hospitalised. Beyond the age of 65, this plan cannot be taken up. Premiums would be $557 a year or $50+ a month.

An accident policy with payouts from a specific Medical Certified illness would be recommended. Food poisoning, dengue and such might not need hospitalization but Noorma would suffer for weeks from loss of income. As long as there is a Medical certificate, the plan pays out $50 a day for up to 10 days. It costs a flat $250+ a year up till age 85 and includes any hospital expenses due to accident, paid in cash.

The final piece of healthcare cover is Careshield life. The AWL is $600, premiums are fixed and it pays out when the insured suffers from the inability to perform Activities of daily living. Read our previous edition below for more in-depth information.

Noorma would be paying $100+ a month or $1057 a year with premiums increasing as she ages. The costs can be managed under her budget of $100+ a month from her added-on CPF Life payouts.

Do you have a loved one that don't have any policies? By contributing to their CPF life, you can control their hospitalization costs.

We believe in sustainable financing of premiums. At age 30, you can finance your coverage with TARP, read below for more.

This article is dedicated to Noorma.