If you have a CPF account, then you are most likely automatically covered by a basic form of life insurance known as Dependants’ Protection Scheme or DPS.
Dependants’ Protection Scheme is term-life insurance scheme administered by Great Eastern Life that covers all CPF members by default. But what is it, really? And should you opt out if you already have your own life insurance?
Update: With the latest change announced by the CPF board on 2 October 2020, DPS has become more attractive with lower premiums and the higher coverage amount. The article has been updated to reflect the latest changes.
What is the Dependants’ Protection Scheme (DPS)?
The Dependants’ Protection Scheme is a term life insurance plan that covers eligible CPF members. It provides coverage for death, terminal illness, and total permanent disability (TPD)
On 2 October 2020, the CPF board announced some key changes to the DPS. This include
- Increasing the maximum age to 65
- Higher sum assured of S$70,000
- More attractive premium
These changes will take effect from April 2021.
The DPS works on an opt-out basis. All Singaporean citizens or permanent residents will be automatically enrolled if they are between the age of 21 and 60, and have made their first CPF working contribution.
You can choose to opt-out of the scheme if you decide DPS is not suitable for you. (More on that later)
DPS premiums are deducted from your CPF OA/SA account, and you will be notified whenever this happens. There is usually no action or top-up required from you.
Who administers the Dependants’ Protection Scheme?
From 1 April 2021, Great Eastern Life will be the sole administrator for DPS.
You will receive a welcome package from your assigned insurer after your first CPF working contribution is credited. The welcome package will guide you to complete the necessary DPS forms.
For those who have an active DPS cover as of April 2021, your DPS covers will continue to be automatically renewed annually until your 65th birthday, no action will be required.
If you are currently insured under NTUC Income, you will be moved to Great Eastern Life when the latter takes over the sole administration of DPS. A new DPS nomination will be required.
How much are Dependants’ Protection Scheme premiums?
Like most life insurance plans, the Dependants’ Protection Scheme premiums vary with your age. Currently, it is based on a maximum sum assured of S$46,000 and is standard across insurers.
From 1 April 2021, the changes in premium and sum assured will take effect. For individuals aged 60 to 65, if you wish to rejoin DPS, you can submit an application directly to Great Eastern Life come April 2021.
The annual DPS premium for the different age groups is as follows:
DPS premiums are first automatically deducted from your CPF Ordinary Account (OA). If there is insufficient balance, it will be then deducted from your CPF Special Account (SA).
You will get a renewal letter every year, about one month before the renewal date, to notify you of the upcoming premium deduction.
If there is insufficient balance in both CPF accounts, you will be notified in this letter, and you’ll have to contact your DPS insurer directly for payment by cash.
Is DPS sufficient to meet your life insurance needs?
For most Singaporeans, the basic Dependants’ Protection Scheme would definitely be insufficient to meet your life insurance needs.
Your life insurance payout is meant to cover your dependants’ living expenses as well as any outstanding loans (e.g. mortgage). The payout will need to be enough to sustain your life support in the unfortunate event of total permanent disablement as well.
To avoid being under-insured, you can consider purchasing life insurance separately. Speak to us to find out more.
Should you opt out of the Dependants’ Protection Scheme?
Assuming that your personal life insurance policy already covers your financial needs, should you then opt out of DPS to preserve more savings for retirement?
Remember that premiums for DPS can be paid with funds from your CPF Ordinary Account (OA) or your Special Account (SA). Term insurance plans offered by insurers cannot be funded by CPF monies.
Regardless, you should consult with your Financial Adviser before you make a decision on this.
What if you really want to opt out of DPS?
If you’ve thought it through and decide you really want to opt out of DPS, you can do so. It is not a compulsory scheme.
You can terminate your Dependants’ Protection Scheme policy by contacting your DPS insurer, who will send you an opt-out form to complete and submit.
Should you change your mind about DPS in the future, you can re-apply for DPS coverage. However, you will need to make a new health declaration if you re-apply, and your application will be assessed on your health condition.
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