You can Opt-Out of ElderShield
ElderShield is not a compulsory, mandatory and no-option scheme. Even though you are enrolled automatically, you can complete the opt-out form in the ElderShield package and exit yourself from the scheme. There are a couple of obvious disadvantages such as higher premiums rates should you change your mind in the future and health underwriting for reapplication.
However, these disadvantages are not show stoppers if you do not feel the need to have the insurance.
Let me just add that there is nothing wrong with opting out if we look at it strictly from a financial planning point of view. It’s basically a decision to not transfer this particular risk because either it’s viewed as not essential or the impact is something you can absorb financially.
Typically, when clients choose to “opt-out”, the payout of $400 a month for a total of 6 years or the total payout of $28,800 is one of the main reason because it is not “attractive” enough. However, having something is better than having nothing so instead of opting out, you can do the next best thing – nothing.
You can do Nothing
I suspect most people will fall into this category. Get auto-enrolled, leave it there and sort this out with the financial planner at the next review and then totally forgot about it. Sometimes, you get “upgrade offers” from insurance companies and either you sign up because the premiums seems affordable or you ignore first and plan to sort the offer out with the financial planner at the new review and then totally forgot about it.
I hope you get the drift. At age 40, it is of very little interest and excitement to imagine a future where you need help to get dressed, someone to help you “toilet yourself” and put food in your mouth at mealtimes. Intellectually, you can understand it but emotionally, it’s totally on another planet unless you had to be a caregiver to feed, dress and bath someone else in the past.
Furthermore, there are so many letters on all types of insurance and national schemes that well, ElderShield really doesn’t stand out as an urgent and important matter to take a decision on.
And yes, the next time you sit down to have a comprehensive financial planning review, this will be discussed and you will probably be advised to do upgrade which brings me to the next point.
You can do Something – Upgrade
It is true that on a monthly payout of $400 a month, you can barely afford to hire a helper. It is also true that based on a total payout of $28,800, it is probably an amount you already have in savings or investments so it makes little sense to buy an insurance when you already can self-insure.
What is not true, however, is that you should opt-out or do nothing with the ElderShield scheme because the monthly or total payout is not attractive. The reason – you can make it attractive.
However, this only makes sense if you believe that suffering from some form of disability in the future is a possibility and it is something you want to plan for in advance.
A recent report states that the average Singaporean will have about 6 unhealthy years of being “saddled with disabilities” in our lifetime. For specific situations like Alzheimer’s disease, the length of disability can vary greatly and it is not unreasonable to expect periods of disability exceeding more than 10 years. The frightening thing about the risk is that it is unknown.
Some insurers have options where you can enhance your ElderShield program to a higher payout every month and for longer periods. I have personally helped a client to upgrade to a higher payout of $2,000 a month for life. The reason the client is so willing to do it – she is looking after a family member with end-stage Alzheimer’s.