You may have heard of it in passing.
You may have even paid for it unknowingly – for years. (I know I have)
Nearly every working adult in Singapore has it.
So what exactly is the Dependents’ Protection Scheme?
And more importantly – should you continue hanging on to it?
Or are there better options out there?
Strap tight and buckle down – we are going for a quick and dirty ride.
What is it?
Here is the official explanation from the CPF DPS page:
DPS is an opt-out term insurance scheme which is automatically extended to eligible CPF members.
DPS covers insured members for a maximum sum assured of $46,000 up to 60 years old. The DPS benefit will be paid out to insured members and their families should the insured members pass away or suffer from Terminal Illness or Total Permanent Disability.
Here is our explanation:
It is a government initiated Term plan but administered (run) by privately owned insurance companies. It is mandatory, but you can opt out if you like.
It covers death, Terminal Illness, and Total & Permanent Disability.
Basically it is term insurance, covering you for a sum of 46k and up till age 60.
Who has it?
Everyone who didn’t opt out and has ever contributed to CPF (welcome to the world of a contributing adult!)
So if you have a positive CPF balance and are below 60 years of age, you are a proud owner of at least one life insurance policy. Yay!
Which Insurer are you under?
Remember the bit about privately owned insurance companies administering the DPS? Right now the two insurers involved are: Great Eastern and NTUC Income. Your DPS is with either one (not both) of these Insurers.
You can find out who is your insurer by logging into your CPF account, or viewing the yearly statement that CPF board sends out.
How did I end up with that Insurer?
A most astute question: It is randomly assigned by the good folks at CPF board.
Yup, it was a coin flip. (But you can change your insurer if you feel so strongly about it)
46k of Sum Assured: Can I change the amount?
No. It was meant as a one size fits all type of thing, for easy administration.
However, the coverage will drop accordingly (be prorated) if you do not have enough funds in your CPF OA or SA to pay the yearly premium.
Is it cheaper than purchasing my own term insurance?
Here comes the million dollar question!
You would think that for a government initiated insurance scheme, it would be the cheapest thing around. But after some sleuthing around, we found that assumption to be untrue.
Here is the price list 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|
A person aged 30 can expect to pay a total of $4000 to be covered till age 60.
Here is our best-known price for a 46k Sum Assured Term plan for a male and female, both aged 30 with the same specs as the DPS:
Male Non Smoker: $2375
Male Smoker: $4335
Female Non Smoker: $1880
Female Smoker: $3755
Holy smokes! This means that for a female, the DPS is actually more expensive than buying her own equivalent Term Insurance.
For a male non smoker, the same holds true.
The only instance where DPS is cheaper is for males that smoke. (by about 10% cheaper, nothing to shout about)
Once again, holy smokes! Who would have thought this were true!
But do note that the DPS can be stopped at any point in time – so the flexibility is there.
Pros and Cons of the DPS
– It can be paid by CPF monies (OA/SA)
– No paperwork required – a big plus for those that are super resistant to buying insurance
– Renews Yearly – no commitment
– Worldwide cover
– Small Sum Assured – 46k isn’t a whole lot
– Only available up till age 60
– More expensive than getting your own equivalent (for majority of us)
Keep your DPS going.
It doesn’t provide much cover, but it is something. The price difference can be significant in some cases, but for a plan that doesn’t need you to do anything – that can be a real plus.
Being able to pay via CPF monies is also a big consideration.
All in, at the end of the day: That “small” sum assured can mean the world of difference to your family.
That being said, DPS is not enough in many, many cases – Go out there and get the cover you need!
www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.