Dependent Protection Scheme: A Comprehensive Guide

22 Nov Dependent Protection Scheme: A Comprehensive Guide

The Dependent Protection Scheme (DPS) is an insurance scheme that aims to provide financial protection for the dependents of CPF members in case of their death or total permanent disability. The scheme was introduced by the Singapore government to help ease the financial burden of families who may lose their sole breadwinner.

In this comprehensive guide, we will take a deep dive into what is dependent protection scheme and provide you with all the information you need to understand the scheme, including its coverage, benefits, eligibility criteria, premiums, claims process, and more. By the end of this guide, you’ll have a better understanding of how the DPS works and how it can benefit you and your family.

What is the Dependent Protection Scheme?

The Dependent Protection Scheme (DPS) is an affordable term life insurance scheme administered by the Central Provident Fund (CPF) Board to provide basic financial protection for the dependents of eligible CPF members upon their death or total permanent disability (TPD).

Introduced in 1987, it provides a basic coverage of $46,000 to $76,000 (depending on age) at very affordable premium rates. The payout can be used to cover the loss of income, funeral expenses and more when the insured member passes away or becomes totally and permanently disabled.

Why Was DPS Introduced?

The DPS was introduced by the government to provide a social safety net for families who lose their breadwinner unexpectedly. It aims to ease the financial burden faced by dependents and ensure their basic needs are taken care of.

Some key reasons for introducing the DPS include:

• Limited coverage from existing schemes: Prior to DPS, the only protection schemes available were the Home Protection Scheme (HPS) and Group Term Life (GTL) insurance. However, HPS only protected homeowners while GTL provided variable and sometimes inadequate coverage.
• Low take-up of life insurance: Survey findings showed low life insurance coverage among lower-income CPF members who needed protection the most. Premium affordability was a key issue.
• Provide adequate protection: DPS was designed to provide adequate protection for families at affordable premiums deducted automatically from CPF accounts. This removed the barrier of underwriting.
• Social safety net: The scheme aims to build a social safety net and ensure dependents of deceased or totally disabled members have basic financial protection.

By plugging the gaps in existing schemes, the DPS provides a basic level of protection for families of blue-collar workers regardless of income and without complex underwriting processes.

Key Benefits and Coverage of DPS

The DPS provides several useful benefits at affordable premiums:

1. Term Life Coverage

DPS provides renewable one-year term life insurance coverage from $46,000 to $76,000 depending on the insured member’s age:

• Ages 21 to 30: $76,000
• Ages 31 to 40: $67,000
• Ages 41 to 50: $49,000
• Ages 51 to 60: $35,000
• Ages 61 to 65: $46,000

This coverage protects dependents by paying a lump sum upon the member’s death.

2. Total Permanent Disability Coverage

DPS also pays out the sum assured if the insured member becomes totally and permanently disabled (TPD) before age 65. This helps replace lost income if the member can no longer work due to disability.

3. Affordable Premiums

Premiums are very affordable compared to regular life insurance. They range from $36 to $215 annually depending on coverage amount and deducted directly from the member’s CPF Ordinary and Special accounts.

4. Guaranteed Renewal

Coverage is guaranteed renewable up to age 65 regardless of health status, unless cancelled voluntarily. No medical underwriting is required.

5. Worldwide Coverage

Insured members are protected 24/7 worldwide. Death or TPD can occur anywhere.

6. Exclusions

There are certain exclusions including death or TPD resulting from drug or alcohol abuse, intentionally caused injuries/illness, or war. Certain dangerous activities are also excluded.

Who is Eligible for DPS?

DPS coverage is open to eligible CPF members who meet the following criteria:

• Age: Between 21 and 60 years old next birthday
• Citizenship: Singapore Citizens or Permanent Residents
• CPF Contributions: Must have at least $60,000 in CPF savings (Ordinary + Special accounts)
• Existing Schemes: Not already covered by the Home Protection Scheme

In addition, insured members should nominate one or more dependents who will receive the payout upon death or TPD. Nominated dependents may include:

• Spouse
• Children
• Parents
• Siblings
• Grandparents

The member can change the nomination at any time.

How Much Does DPS Coverage Cost?

DPS premiums are very affordable compared to regular life insurance plans. Annual premiums range from only $36 to $215 depending on coverage amount.

The annual premiums payable based on coverage amount are:

• $76,000 coverage: $215
• $67,000 coverage: $175
• $49,000 coverage: $125
• $35,000 coverage: $75
• $46,000 coverage: $36

These premiums are deducted automatically from the insured member’s CPF Ordinary and Special accounts yearly. Any Medisave funds in excess of the Medisave Minimum Sum can also be used for payment.

There are no hidden costs or loading fees charged. The low-cost coverage is subsidized by the government to make it affordable for all eligible members.

How to Apply for DPS Coverage

Applying for DPS coverage is simple and convenient:

1. Check Eligibility

First, check that you meet the DPS eligibility criteria for age, citizenship, CPF balance and existing schemes. Use the DPS Eligibility Indicator on the CPF website.

2. Select Nominees

Decide on your nominee(s) – dependents who will receive the payout upon your death or TPD. You can nominate up to 4 dependents.

3. Submit Application

You can apply online via the CPF website, or in person at a CPF service center. Just fill in the application form and submit together with nominees’ details.

4. Premiums Deducted

Once approved, premiums will be automatically deducted from your CPF account yearly.

The application process is simple, no medical check-up is required and coverage starts immediately once approved.

How to Make Claims Under DPS

Here are the key steps for nominees or dependents to make a claim under DPS:

1. Notify CPF

First, inform the CPF Board of the insured member’s death or TPD. This should be done as soon as possible.

2. Submit Documents

CPF will advise on the documents required. For death claims, documents like the death certificate are required. For TPD claims, submissions from doctors are required.

3. Process Claim

CPF will assess the claim, validate documents and may require additional information from doctors or hospitals.

4. Approve and Pay Claim

Once approved, CPF will pay the sum assured to the appointed nominees via their bank account or CPF account. This is usually done within 1 month.

Making a DPS claim is reasonably straightforward. CPF will assist nominees through the process.

DPS Coverage Beyond Age 65

While DPS coverage ends at age 65, insured members can extend their dependant protection beyond 65 via these options:

• Renew DPS coverage for 5 more years: Insured members can apply for a one-time DPS renewal from age 65 to 70 at the same premiums. This extended term life coverage provided additional protection for dependents beyond 65.
• Buy Eldershield: This provides coverage against severe disability beyond 65. Members can use Medisave to pay premiums.
• Buy life insurance: Members losing DPS coverage at 65 should consider getting regular life insurance and using Medishield Life to extend health insurance.

With some planning, DPS insured members can ensure dependents continue to be financially protected even after they turn 65.

Pros and Cons of DPS

Here are some key advantages and disadvantages of the Dependent Protection Scheme to consider:

Pros

• Affordable premiums
• Guaranteed renewal
• Simple underwriting
• Flexible nomination of dependents
• Quick claims process
• Lifelong protection up to age 65

Cons

• Coverage limits may be inadequate for some families
• Limited exclusions covered
• No savings or investment element
• Coverage ends at age 65
• Limited options to customize coverage

While DPS provides affordable coverage, members may need to supplement it with regular life insurance if they require higher coverage or more comprehensive benefits.

Conclusion

The Dependent Protection Scheme (DPS) has provided basic and affordable term life coverage for families of insured CPF members since 1987. By providing a safety net, it protects dependents against loss of income when the breadwinner passes away or becomes totally disabled.

American Income Life horror stories reveal the dark side of MLM insurance, highlighting the deceptive practices that contrast sharply with the straightforward benefits of DPS coverage, which, with its modest limits, low premiums, and convenient application, serves as a crucial and accessible option for lower-income CPF members, addressing the gaps often faced by blue-collar workers and their families in the realm of life insurance.

With proper financial planning, DPS can form a useful foundational part of an insurance portfolio to provide basic protection. It may then be supplemented with higher regular life insurance coverage and integrated plans for more comprehensive coverage.

FAQs

1. What is the maximum coverage provided by DPS?

The maximum coverage is $76,000 for members aged 21 to 30 years old. Coverage reduces with age to $46,000 for ages 61-65.

2. Can I use Medisave to pay DPS premiums?

Yes, any excess Medisave funds beyond the Medisave Minimum Sum can be used to pay DPS premiums automatically.

3. Are pre-existing medical conditions covered by DPS?

Yes, DPS coverage does not require any medical underwriting, so pre-existing conditions are covered.

4. What disabilities are covered under DPS TPD coverage?

DPS covers total and permanent disability from any cause, as long as the disability meets the definition and exclusions.

5. Can I change my DPS nominee(s)?

Yes, the insured member can change their DPS nominees at any point by submitting the updated details to CPF Board.