Opt-Out for Dependants’ Protection Scheme (DPS)

What is Dependants’ Protection Scheme (DPS)?

DPS is an opt-out term insurance scheme which is automatically extended to eligible CPF members. It covers:

1) Sum Assured: $46,000 + $5,000

2) up to 60 years old

3) for Death, Terminal Illness (TI) or Total Permanent Disability (TPD)

Source and more details can be found here:
https://www.cpf.gov.sg/Members/Schemes/schemes/other-matters/dependants-protection-scheme#Item1570

DPS Premium:

Age (Last Birthday)	Yearly Premium
<= 34 years	$36
35 - 39 years	$48
40 - 44 years	$84
45 - 49 years	$144
50 - 54 years	$228
55 - 59 years	$260

From 40 to 59 years, the total premium you will need to pay is $3,580

($84x5 + $144x5 + $228x5 + $260x5).

If we go to CompareFirst (appreciate Government initiative), I search for similar product as DPS:

Search under "Term Life Products" with the following options:

- Date of Birth: 1 Jan 1976 (for 20yrs calculation)

- Smoker: No

- Premium Type: Annual

- Coverage Term: 16 to 20

- Sum Assured: $50,000

- Critical Illness Benefit: No

- Sort Results by: Premium (Lowest - Highest)

You will get the results from Great Eastern Life as the cheapest at $76 & $91 for female and male respectively (as of 26June2016).

Note: Reducing Sum Assured if different from DPS as the sum assured reduces over time.

So for 20 years, you will pay $1,520 (female) & $1,820 (male) only to cover:

1) Sum Assured: $50,000

2) up to 60 years old

3) for Death, Terminal Illness (TI) or Total Permanent Disability (TPD)

It's a savings of $2,060 (58%) for female and $1,760 (49%) for male.

The only caveat is that you need to use Cash instead of CPF monies to purchase the Term Insurance. Having say it, your $76 (~$6/mth) cash will not have much financial impact on your monthly expenses. To add, keeping your CPF monies, will give you a minimum of 2.5% interest.

WHOptimized:

• If you are 40 now, choose to opt-out of DPS. It's more worth to buy Term as it's cheaper by up to 58%.
• You can also hold your Term Insurance purchase until you actually need it e.g. when child comes along, house commitment, etc.
• You buy insurance for dependencies. If you have no dependencies, most of the time, you don't need any.