When a Singaporean young adult starts earning a full-time salary, it’s almost a rite of passage to get bombarded with mail from banks and insurance companies. At the same time, CPF will also send a letter regarding this term life insurance scheme called Dependants’ Protection Scheme (DPS).
But what is it, really? How does it work? And maybe most importantly, how can you claim a payout? Let’s find out.
Note: DPS will be updated from April 2021. This article reflects the new and updated scheme.
What is the Dependants’ Protection Scheme?
Dependants’ Protection Scheme is a term life insurance scheme which is automatically extended to all Singaporeans and PRs between ages 21 and 65. It’s not compulsory, but you have to opt out if you don’t want to be covered.
If you do nothing, you are covered for the maximum sum of $70,000 up till your 65th birthday. Like most other term life insurance policies, this benefit will be paid out to your family should you pass away, or to you if you become permanently incapacitated.
Essentially, this scheme allows CPF members (basically all Singaporeans and some PRs) to enjoy some level of financial protection at affordable premiums. You can also use your CPF Ordinary Account or Special Account savings to pay for the premiums, so it’s a “painless” expense.
Clueless about this life insurance thing? You can read more about life insurance in our basic guide.
Who is eligible for the Dependants’ Protection Scheme?
You are automatically included under Dependants’ Protection Scheme if you are a Singaporean citizen or PR between 21 and 65 years old.
Usually, you’ll get a letter notification within five working days from making your first CPF contribution.
This letter will come from Great Eastern Life, which will be the sole administrator for DPS from April 2021. (Prior to 2021, DPS was administered by either Great Eastern or NTUC Income.) The welcome package will guide you on how you can complete your DPS application.
As soon as you have enough money in your CPF for the most basic coverage, you will be automatically covered by this insurance policy, but you will be sent a health declaration form so you can declare any serious health issues.
But what if I have health problems?
You will need to fill in a health declaration form every time you apply for Dependants’ Protection Scheme whether it’s the first time or if you’re getting it reinstated at a later date.
The DPS insurer will consider your eligibility on a case-by-case basis. DPS coverage may be declined if you have any serious pre-existing medical conditions. It also then can be assumed that if you lie and say you’re fine, but have a pre-existing condition that you try to claim upon later, you won’t receive your claim.
How much do the DPS premiums cost?
The Dependents’ Protection Scheme will be revised from April 2021 onwards. Previously, the maximum payout (sum assured) was just $46,000, but from April, it will increase to $70,000.
Premiums for some age groups will also increase from April 2021 onwards. This is what you can expect to pay each year:
|Age (years)||OLD DPS premium ($46,000 sum assured)||NEW DPS premium ($70,000 sum assured)|
|34 and below||$36||$18|
|35 to 39||$48||$30|
|40 to 44||$84||$50|
|45 to 49||$144||$93|
|50 to 54||$228||$188|
|55 to 59||$260||$298|
|60 to 64||Not covered||$298 ($55,000 sum assured)|
Your yearly DPS premium will increase as you age. That means you will start paying $18 a year up to age 35, with premiums then rising every 5 years up to $298 a year from age 55.
Note that DPS premiums remain the same regardless of gender and how long you’ve been on the Scheme.
What if I can’t afford my DPS premiums?
Dependants’ Protection Scheme premiums can be fully paid from your CPF savings. So if you have sufficient funds in your CPF, you don’t need to worry as your policy will be automatically renewed every year.
If you have enough savings in your CPF to pay the full premium, you will be automatically covered for the maximum amount of $70,000. The premium will first be deducted from your Ordinary Account. If you do not have sufficient savings in your OA, the premiums will be deducted from your Special Account.
If you are unable to pay the full premium because you don’t have enough in your CPF, you may opt to pay the remainder in cash.
Finally, if you really can’t or don’t want to pay for DPS, you can contact the insurer if you decide you want to drop out of the scheme. The insurer will send you an opt-out form and, once the termination is complete, the pro-rated annual premium will be refunded to you.
Bear in mind that if you want to reapply for DPS after terminating, you can, but you have to submit a health declaration. The insurer may deny your coverage if you are not in good health.
How do I benefit from the Dependants’ Protection Scheme?
When you’re young with no commitments, it seems kind of silly to pay annual premiums for a DPS policy. (Although premiums are only $18 a year, so it’s not really worth quibbling over.)
But from the age of 30, the Dependants’ Protection Scheme starts to become more valuable. That’s the age when people start settling down with their partners, getting married, having kids — and also when your parents start retiring and depending on you.
If you die or suffer total permanent disability in your 30s and 40s, you may be putting a big financial strain on several people. The DPS scheme provides some basic coverage in the form of a $70,000 payout for your loved ones.
Of course, the payout from DPS isn’t going to be enough for all your dependents to live on forever. But it can help with the short-term expenses while they cope with your loss.
Can I get a higher payout than $70,000?
You can’t alter the payout amount under the Dependants’ Protection Scheme. But you can supplement your coverage with a separate term life insurance policy, which is worth considering if you have significant liabilities like a home loan.
Term insurance policies work in basically the same way as DPS, except you can choose the amount of payout you want, and your premiums will be adjusted correspondingly.
Below are some examples of term insurance.
In the event of your death, both DPS + your private term insurance policies will pay out. So there’s no real need to cancel your DPS policy even if you have a separate life insurance plan.
Think of DPS as your backup plan — if something happens and you’re not able to pay your private life insurance premiums, at least you’re still covered for $70,000 under DPS.
How to claim from the Dependants’ Protection Scheme?
You can make a claim by submitting to your insurer, i.e. Great Eastern Life (from April 2021 onwards). The claim will be processed if the insured member is any of the following:
- Certified to have passed away,
- Diagnosed with a terminal illness
- Diagnosed with total permanent disability
Take note that claims that arise out of suicide, self-inflicted injury, criminal offences or intentional acts will not be covered. See full terms and conditions on the CPF Dependants’ Protection Scheme page.
If your loved one has passed away and you aren’t sure if he/she’s covered under DPS, you can email [email protected], or check with the respective DPS insurer.
DPS claims vs CPF nomination scheme: what’s the difference?
Do take note that DPS claims are not the same as the CPF nomination scheme.
Under the CPF nomination scheme, you decide on who gets your CPF savings when you die. You can select more than 1 nominee and specify the percentage of savings that will go to them.
You can submit and change your CPF nominee at any point. If you don’t specify your nominee(s), your CPF savings will be distributed to your next-of-kin according to inheritance laws.
DPS also requires you to nominate your beneficiaries, i.e. who should receive the payouts if you die. But your CPF nominee has no bearing on your DPS nominees; you can choose different beneficiaries for each.
Bearing in mind that DPS requires your loved one to file a claim, while CPF redistribution is automatic. So, for example, you can nominate your spouse for DPS, and your ageing parents for your CPF.
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Research done by: Samuel Tan