Insurance for Senior Citizen: How to provide and cover yourselves adequately

By far, the two most import­ant fin­an­cial issues that con­cern Seni­or Cit­izens are:

  1. Do I need to buy annu­ity;
  2. Am I too old to buy life insur­ance? Wouldn’t the premi­um be very high?
  3. How do I pro­tect my hard-earned sav­ings?

The short answers to the first two ques­tions are ‘YES’ and ‘NO’ respect­ively.

The best options for Seni­or Cit­izen, age 50 and above,  are two insur­ance plans that can provide him with a monthly pay­out for your entire life­time, and take care of final expenses when the final day comes.

The first of the 2 insur­ance plans is the Annu­ity.

Annu­ity for Singa­pore Cit­izens and Per­man­ent Res­id­ents aged 50 and below as at 31 Dec 07 is now com­puls­ory. If you did not pur­chase any annu­ity from private insurers, the com­puls­ory annu­ity will take effect at age 55 and you can only start draw­ing the pay­out at age 85.

For private annu­ity, you can use your CPF Min­im­um Sum or cash to pay for it. For annu­ity pur­chased using CPF min­im­um sum, the first pay­out will be at age 62. For annu­ity pur­chased using cash, the first pay­out can be any age (for instance, first pay­out age for NTUC Income is from age 40 to 65) chosen by the policy hold­er. If you are cash-rich, it is advis­ible for you to leave your CPF Min­im­um Sum with CPF Board that will pay you monthly income from your draw-down age for a fixed num­ber of years  You may then use the cash to buy an annu­ity that will pay you anoth­er monthly income, prob­ably at an earli­er age, for life. The annu­ity will sup­ple­ment the monthly pay­out from the CPF Min­im­um Sum, and will replace it once it runs out in, say 20 years. The monthly income from the Annu­ity will be much high­er after 20 years, if you buy the annu­ity that enjoys the bonus declared by the insurer.

As for life insur­ance, if you think that you can­not afford to buy any whole life insur­ance at age 50 due to high premi­um and pre-exist­ing ill­ness, fret not! As of the time of writ­ing, NTUC Income is the only insurer in Singa­pore that has a life insur­ance plan (called Seni­or Plan) that cov­ers you for whole life for death and for Total Per­man­ent Dis­ab­il­it­ies till age 65. So, you can still pur­chase life insur­ance at age 50 to 70, even with a pre-exist­ing ill­ness if you have not been hos­pit­al­ized for the past 12 months. The best thing is that you just need to pay for 10 years to get the whole life cov­er­age.

The sum assured for the Seni­or Plan is $15,000 and the cov­er­age will increase every year since it is a par­ti­cip­at­ing policy which gives you bonuses over the years.  The sum assured is, how­ever, pro-rated for the first 5 years of insur­ance. This means that the first year cov­er­age starts from $3000, becomes $6000 in second year and increases lin­early to $15,000 by fifth year. For a male age 50, the sum assured becomes $27,240 at age 80 with a total premi­um of $11,106. As it increases the value of the premi­um paid, the Seni­or Plan is best for provid­ing for the final expenses and leav­ing behind some inher­it­ance for chil­dren. Poli­cy­hold­er can sur­render the policy for the cash value, but this will be lower than the pro­tec­tion value.

If you have a cap­it­al sum to invest, the bet­ter and safer choice is to des­pos­it it with any insur­ance com­pany that pays a decent interest, around 3–4% and provide free insur­ance with the sum assured amount above your prin­cip­al sum. Some insur­ance com­pany also pay double the sum assured if the insured were to pass on or become per­man­ent dis­abled due to unfore­seen acci­dent.

Hence, to be assured of provid­ing for your­self adequately for your whole life and to be covered for Death and Total Dis­ab­il­it­ies, a private annu­ity, Seni­or Plan from NTUC Income and Lump Sum depos­it with insur­ance com­pany are the three com­ple­ment­ing plans that all Seni­or Cit­izens should con­sider.


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