Dependant's Protection Scheme (DPS) | Government Scheme Series
What is DPS?
When you look at your CPF statements, do you see a deduction in the name of Dependant’s Protection Scheme (DPS) Premiums? The premiums are relatively small so sometimes the coverage goes unnoticed. But, the DPS scheme is actually a term insurance plan which covers you for death, terminal illness or total and permanent disability. So, who are dependants and why do they need protection? Well, dependants are those who rely on you for a living. These people may include your parents, spouse, children or other family members. Should you, the breadwinner pass on prematurely or suffer a terminal illness or a total and permanent disability, the lives of these people will suffer financially too. Therefore, DPS is one way to ensure that there is some coverage for those who depend on your income for their livelihood.
DPS coverage is automatically extended to CPF members (Singaporeans and PRs) upon their first CPF contribution between the ages of 21 to 60 (Age 65 after 1st April 2021). Premiums are very affordable and you can pay them using your CPF Ordinary or Special Accounts.
What is happening from 1st April 2021?
Come 1st April 2021, there will be changes to your DPS coverage. For one, it will now solely be administered by Great Eastern Life. This means that if your DPS coverage was formerly with NTUC Income, they will all automatically transition over to Great Eastern Life. Here are some things to note about the transition:
1. Higher Coverage at Lower Premiums
Bargain! Discount! The very essence of a true-blue Singaporean 😊 Your new DPS coverage will have an insured sum of:
$70,000 (For those aged 21 to 60) and
$55,000 (For those aged between 60 to 65)
Previously it was only $46,000. And what is amazing is that even though the coverage is higher, the premiums have become lower!* For my age band, I was paying $48 per year. My new premium is now $30 per year! This is definitely a welcomed change.
*This decrease in premium is not the case for all age bands. Those aged 55 to 59 will see a slight increase in their premiums from $260 per year to $298 per year. The new premium for those aged 60 to 64 will now be at $298 per year (For a $55,000 sum assured).
2. Increase in coverage term
Previously, coverage would end at age 60. However, now those aged 60 to 65 can still continue to enjoy being covered under the DPS scheme but at a lower sum assured amount of $55,000 as compared to $70,000 for those aged below 60. Even though the coverage is lower, I still believe it is good that the coverage term has increased to age 65 as it means more people can still be covered till an older age. Our life expectancy for 2020 was 83.66 years. This means that people are living longer thus the coverage being extended is a good thing.
If you had done a nomination before with NTUC Income, it will no longer be valid once the transition happens. This is because the DPS policies with NTUC Income will cease after 31st March 2021. You will be required to make a new nomination and Great Eastern Life will send out nomination forms to you.
If you had previously done a nomination with Great Eastern Life, you do not need to make a new nomination unless you wish to nominate new beneficiaries.
It is always valuable to do your nominations as this enables your beneficiaries to have access to this coverage upon your passing in an efficient and timely manner.
4. Health Declaration
If you have made a valid health declaration before, you will not need to submit a new one if your insurer changes. Great Eastern Life is required to take over all obligations of DPS policies issued under NTUC Income. There was a bit of confusion in the community about this point. The reason being, there were concerns raised about needing to declare newly developed illnesses upon the transfer from NTUC Income to Great Eastern Life. However, Great Eastern has assured policyholders that they will continue to be covered should any medical condition develop on or after the commencement of the NTUC Income DPS policy.
If you had a pre-existing condition before the original commencement date of your DPS policy that was previously undeclared, however, you should submit a new health declaration to inform your new insurer of the condition.
When can a claim be made under DPS?
Death A claim can be made by nominated beneficiaries. However, if you are unsure if a person was covered under the DPS scheme, you can either approach Great Eastern to check on the details or enquire here.
Terminal Illness This has to be certified by an accredited doctor that the illness will likely result in death within 12 months
Total and Permanent Disability (i) Unable to take part in any employment permanently (You must have stopped physical employment) (ii) Total and Permanent loss of physical functionality of:
- Both eyes OR
- Two limbs OR
- One eye and one limb The total and permanent disability also needs to be certified by an accredited doctor and a medical report will be required too. Claims for terminal illness and total and permanent disability can only be made if they occur on or after 1st May 2016!
Is DPS Compulsory?
You can opt-out of the DPS Scheme at any time. This is not a compulsory scheme to join. However, there are certain benefits to it such as:
Payment from CPF Ordinary or Special account (no out-of-pocket cost incurred)
What if you are 55 years old or older?
You can reconsider this coverage if you have already made sufficient arrangements to bequeath your beneficiaries with a death pay-out given that premiums are higher for those aged 55 to 65.
Single with no dependants?
There still will be costs incurred upon your demise for your funeral expenses. And if you also have existing loans with banks, they do not just disappear overnight and instead get transferred to your family members. Alternatively, you might be a supporter of a charitable organisation and can consider naming them as a beneficiary. At the end of the day, whether you choose to continue with the DPS Scheme or not is entirely your choice. But make that choice after considering the benefits of having this cover in the first place.
If you are unable to set aside funds for other types of private insurance coverage, this might be a good option for you considering the low premiums and payment via CPF Ordinary or Special Accounts.
If you still have more questions about DPS or any insurance-related matters, drop me a message below or email me at email@example.com, and I will be happy to help. Have a lovely day!