The Dependants’ Protection Scheme (DPS) crash landed into your life automatically.
What is it all about?
Should you retain it?
Is it enough?
Today, we take a deeper look at this scheme and the reasons why it’s good (and not so good).
What is the Dependants’ Protection Scheme?
The Dependants’ Protection Scheme (DPS) was privatised on 17 September 2005 and is currently offered to CPF members only.
It is a form of term life insurance that provides some protection to those who are insured under the scheme.
Is it compulsory? No.
DPS is a scheme that you can opt out from. But should you? Read through this article and you’ll get your answer.
The Coverage of the DPS
When you’re insured under DPS, you’ll be covered for a maximum of $46,000.
- Terminal Illness
- Total and Permanent Disability
It offers worldwide coverage and only up to 60 years old. After that, the cover stops.
But if any of insured events happen before that, there will be a payout to the insured member or their families.
When Are You Automatically Enrolled
When you fulfil certain criteria, you’ll be automatically enrolled into DPS.
Here are the criteria:
- Singapore Citizen or Permanent Resident
- Between Age 21 and 60
- Made your first CPF contribution
But if you’re between the age of 16 and 21, you can also manually apply to be included.
The 2 Administrators of the DPS
As the scheme is privatised, two insurance companies are appointed to be the administrators:
- NTUC Income
- Great Eastern
Once you’re automatically enrolled, you would receive a welcome package in the mail from your assigned insurer.
It also means that for all matters regarding DPS, you should approach your own assigned insurer, and not CPF.
If you prefer the other insurer, you can still change by applying directly to your preferred one.
However, the new insurance company will still reassess your health before approving.
The DPS Premiums
Here are the premiums for DPS:
|Age (Last Birthday)||Yearly Premium|
|34 years and below||$36|
|35 – 39 years||$48|
|40 – 44 years||$84|
|45 – 49 years||$144|
|50 – 54 years||$228|
|55 – 59 years||$260|
Take note that the premiums increase with age band so it doesn’t mean that if you entered early, the premium will be locked in.
Looking at the premium table, you can see that the premiums are substantially higher when you hit 45 years old. This could also reflect the higher probability of claims after that age.
By default, premiums will be deducted from your CPF Ordinary Account first. If there isn’t sufficient balances, then a deduction will be made from your CPF Special Account. And if that still can’t be deducted, a cash payment will needed. If not, you can choose to be covered at a lower sum assured (minimum of $5,000).
As the DPS is meant to be an individual scheme, the premiums can only be paid from your own CPF account. If you wish for your parents or spouse to be covered, you can’t pay their premiums using your CPF monies – it has to be from their own accounts.
DPS Has No Cash Value
As DPS is still a term insurance, it does not accumulate cash value.
Term insurance is designed to provide the highest coverage at a low premium.
Simply put, you pay the premium to enjoy getting covered.
Therefore, if you don’t wish to have the cover, you can just terminate it. You’re still able to rejoin again in the future but subjected to underwriting.
All in all, if you paid the premiums till you’re 60 years old and nothing happens, you’ll not have any refunds or anything back.
But that’s also a good thing because you’ve enjoyed good health throughout those years.
How to Check If You’re Insured Under DPS
… or which insurer you were assigned to.
Steps to check:
- Login with your SingPass
- Click on “My Messages” on the left panel
- Scroll down to “Insurance”
- and you should see the below picture.
If you’re insured under DPS, you’re able to see the section (last picture) and which insurer you’re assigned to.
If you’re not insured under DPS, the section will be empty.
On Pre-Existing Conditions and Illnesses
Like any other insurance, you’ll need to declare your health by submitting a health declaration form.
This health declaration form is required for both first-time applicants and re-joiners.
The application is subjected to approval and depending on your current health, you may still get deferred or declined.
Here are the list of serious conditions that may restrict you from getting coverage:
|A||Ischaemic heart disease/Coronary heart disease, heart valves disorders or arrhythmia (irregular heartbeats)|
|C||Stroke/Cerebrovascular disorders, tumour of the brain or Arteriovenous Malformation|
|D||Renal failure or renal dialysis|
|E||Diabetes with complications|
|F||Chronic liver disorders, liver cirrhosis, hepatic encephalopathy or liver failure|
|I||Severe psychiatric or mental illness|
|J||Motor neuron disease|
|M||Chronic lung disease|
|N||Rheumatoid arthritis with complications|
|P||Systemic lupus erythematosus with complications|
|Q||Parkinson disease with complications|
|S||Aplastic anaemia, Thalassaemia major or severe blood disorders|
|T||Any illness, excluding those mentioned from (A) to (S), which is likely to lead to a limb/spinal/eye/mental condition|
|U||Any other illness, excluding those mentioned from (A) to (T), which is certified by a medical practitioner registered under the Medical Registration Act to be a serious illness|
You Can Also Make a Nomination
Take note that a nomination applies only for the death claim benefit – it goes to your nominated parties.
If a terminal illness or total permanent disability happens, the payout will be to the insured member instead.
By having a nomination, the process of claiming will be easier for your family.
If you’ve already made a CPF nomination, it doesn’t apply to DPS as they’re separate. Therefore, you’ll still need to submit a nomination form to your assigned DPS insurer.
In case you wish to change the nomination in the future, you can still do so by submitting a new form.
Making a DPS Claim
DPS covers Death, Terminal Illness and Total and Permanent Disability.
But what constitutes to an eligible claim?
Here are the claim definitions:
Terminal illness: refers to an illness that is likely to result in the death of the member within 12 months
Total permanent disability: refers to
(i) the inability to take part in any employment permanently, or
(ii) the total permanent loss of physical function of any of the following:
Both eyes, or
Two limbs, or
One eye and one limb
These must be certified by an accredited doctor in Singapore.
(If you’re interested, you can take a look at our study on life insurance claim statistics in Singapore.)
But there are exclusions too.
DPS benefits will not be payable if the following happens in the first year:
- member committed self-inflicted injury or suicide,
- member committed a criminal offence punishable by death, or
- the claim arose out of member’s own intentional criminal act.
DPS will also not be be payable if:
- member was not in good health before the commencement of DPS cover,
- member provided false or misleading information, or
- the claim arose from wars or any warlike operations or participation in any riot
When there’s an eligible claim, you will need to approach your assigned insurer and submit the necessary claim forms and documents.
3 Reasons to Stick With DPS
Overall, there are good reasons to stick with the scheme.
Here are 3 of them:
#1 Premiums are affordable
For the maximum coverage of $46,000, the premium is relatively small in the lower age band. It’s something that will not break the bank. As long as you’re working, you shouldn’t have any problems paying the premiums.
#2 Ability to use CPF monies
With cash, there’s no limitations to what you can use it for. But for CPF, there are many. For DPS, at least you can use your CPF OA and SA funds to pay for the premiums. It enables you to save your cash for other commitments.
#3 Provides some form of protection
When you start working, your income becomes vital to you and your family. DPS offers some form of “compensation” if an adverse event happens. And as it’s automatically enrolled, you don’t have to go through the hassle to apply.
2 Reasons Why DPS May Not Be The Best Option
#1 There may be cheaper options
Strait Times published a comparison between the premiums of DPS and term life insurance.
As you can see, both the premiums of DPS and the term life insurance increase with age.
The premiums of DPS start off smaller, but become substantially higher after age 45.
But for the term life, it starts off higher but doesn’t get much higher than the DPS after 45 years old.
The most important thing to note is the total premiums that are paid – DPS is higher.
In current times, term insurance products are usually levelled – premiums stay the same throughout the years. But that doesn’t mean it’s most expensive. Depending on the amount you wish to cover, it can be more cost effective.
#2 Coverage may not be enough
In most cases, $46,000 is not enough in Singapore. It can be used up in a few years’ time.
Then what happens after?
Use your hard-earned money?
And if that’s used up too, you’ll need to look for your friends and families for help.
Therefore, if you’re contributing an income to the family, it’s important to protect that income from disasters.
And one more thing: DPS does not cover critical illness which can have a high probability of happening.
If you don’t know how much you should be covered, take a look at our life insurance calculator.
Should you opt out of DPS?
If you’re young, the premiums are very low and insignificant. You may as well keep it since you’re not using cash.
But in my opinion, that shouldn’t be the main consideration.
DPS is meant to provide some form of protection. And that “some” usually translates to “inadequate”.
To most, DPS is the first ever life insurance they’ve gotten (unwillingly).
But if you’re at a stage where you want to willingly explore proper financial protection, you can first estimate how much life insurance to cover. Then perhaps, take a look at other options such as term plans or whole life plans.