What is Dependants’ Protection Scheme (DPS)?
DPS is an opt-out term insurance scheme which is automatically extended to eligible CPF members. It covers:
- Sum Assured: $46,000 + $5,000
- up to 60 years old
- 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:
Yearly Premium | Age (Last Birthday)
$36 | 34 years and below
$48 | 35 – 39 years
$84 | 40 – 44 years
$144 | 45 – 49 years
$228 | 50 – 54 years
$260 | 55 – 59 years
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 (really 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:
- Sum Assured: $50,000
- up to 60 years old
- 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 ($6.33/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.
Exclusive Summary:
If you are 40 now, choose to opt-out of DPS. It's more worth it to buy Term as it's cheaper by up to 58%.
You can also hold your Term Insurance purchase until you actually need it like 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.