Being Specific – Should You Switch to CareShield Life if you are already on ElderShield?
The full and exact premium schedule for CareShield Life is not known yet so to decide based on a comparison of cost and benefit analysis may not be the best approach. In fact, until 2021, there is no possibility of making a switch so the immediate decision to make is not on switching over to CareShield Life but rather, what should you do with your current ElderShield plan in anticipation of the possibility to make the switch in 2021.
Based on the available information on both schemes, here are in my opinion the 3 situations most existing ElderShield policyholders find themselves in and which approach will be most appropriate for their preferences – with the overarching guideline being “the more the coverage, the better the choice”:
a. You prefer to have basic coverage only
This can be for many reasons. For example, the additional budget to enhance your coverage may be a concern or you do not see long term care planning as a priority yet you don’t mind having some form of basic coverage “just in case”.
In such a situation, you should make the switch from ElderShield to CareShield Life when possible as both premiums can be fully funded using CPF-Medisave funds and you can get an enhancement of coverage at the basic level.
b. You are unable to upgrade your existing ElderShield coverage
This is usually due to health reasons. You appreciate the importance of having more insurance coverage for Long Term Care and tried to apply to upgrade your coverage but was declined due to existing medical conditions.
In this case, making the switch to CareShield Life will be beneficial as you are able to enhance your insurance coverage. Do note that the switch is only possible if the existing ElderShield policyholder is not already severely disabled.
c. You want to be well covered for Long Term Care (beyond CareShield Life benefits)
This is, in my opinion, a situation where there is a “maybe”. CareShield Life has no doubt provided an enhancement in coverage compared to ElderShield but this does not mean that CareShield Life is designed to be a comprehensive long term care insurance plan. Like ElderShield, it provides a foundation but the foundation alone will not complete the building.
Let’s use an example of someone planning to have an additional $1,900 a month in income should there be a loss of independence. This person enrolls into CareShield Life at age 30 at year 2020. At age 67, the monthly payout for CareShield Life is about $1,250 (assuming growth of 2% from the $600 monthly payout for 37 years) upon a claim. While the payout has increased over the years, there is still shortfall of $650 a month.
By upgrading your existing ElderShield coverage first to the level of coverage you want (e.g. monthly payout of $1,900 a month), you can immediately enjoy the enhanced coverage as well as “lock-in” your good health so that even if your health status changes later on, you are already well covered without the need to switch to CareShield Life.