Why women pay higher CareShield Life premiums

22 Jul 2018 
SOURCE: The Sunday Times © Singapore Press Holdings Limited. Reproduced with permission

Healthcare and the insurance that pays for it have long been hot topics here, so it is no surprise that CareShield Life has sparked much debate.

One gripe about the scheme, which will be compulsory for those aged between 30 and 40 by 2020, is that women will pay higher premiums.

The annual premium starts at $206 for men but $253 for women - $47 or 23 per cent more a year.

Premiums will rise by 2 per cent a year for the first five years. Future increases will be announced later.

In a nutshell, both CareShield Life and ElderShield provide monthly payouts in th​e event of severe disability, defined as the inability to independently perform at least three of six activities of daily living - washing, dressing, feeding oneself, using the toilet, moving around indoors, and getting from the bed to a chair or vice versa.

People above 40 in 2020 have the option of sticking with ElderShield or switching to the new scheme in 2021 by topping up their premiums.

Though the CareShield Life premiums are payable until age 67, the cover will be for life.

Senior Minister of State for Health Amy Khor said women must pay higher premiums because three in five women who are healthy at 65 will go on to become severely disabled, compared with two in five men.  Women are also more likely to remain in disability for a longer period than men, so the higher premiums they are required to pay reflect the difference in risks.


What insurance experts say
Mr Andrew Yeo, NTUC Income's general manager for life and health insurance, says insurance premiums are determined based on the probability of risk the plans cover.

"Risk factors that are being taken into consideration include lifestyle (for example, whether the insured person is a smoker), health status/history and life expectancy.

"This principle applies to all insurance plans in general, including whole-life insurance, term insurance and long-term disability plans."

He says women do not always attract higher premiums.

They pay less than men for whole-life and term policies due to their longer life expectancy. This means a woman's probability of claiming is lower than a man's.

Whole-life insurance provides protection and savings, while term plans offer a payout in the event of death and total and permanent disability within a specified period.

In contrast, for long-term disability plans like ElderShield and PrimeShield (an ElderShield supplementary plan) that Income offers, premiums for women are higher due to the higher probability of claims.

Mr Yeo notes: "Women live longer and, as disability is more likely to take place in the later years, they are more susceptible to suffering from disabilities for a longer period, compared with men.

"Therefore, it is more sustainable and equitable to price premiums for women differently."

Mr Christopher Tan, chief executive officer of Providend, notes that it is important the CareShield Life scheme is sustainable in the long run.

"Given that CareShield Life's premiums are paid by men and women for the same number of years but the plan provides lifetime coverage, women would need to pay higher premiums to reflect their longer life expectancy (which means they benefit more than the men)," he says.

"In addition, the risk of severe disability differs between men and women, especially beyond age 67, when premium payment has stopped.

"As such, CareShield Life premiums are gender-differentiated to reflect the difference in risks."

In the case of national hospitalisation scheme MediShield Life, premium payment goes on as long as the policyholder is alive.

Because women are likely to live longer and therefore pay more premiums - but get similar benefits as men - MediShield Life premiums are not gender-differentiated, Mr Tan says.

Ms Ho Lee Yen, chief customer and marketing officer at AIA Singapore, says that for critical illness plans, premiums for women are typically higher than for men.

This is because they face higher incidence of cancer, with breast cancer being the most frequent cause of cancer deaths among women here.

She adds that premium differences also depend on other factors such as age, health status and benefits offered under each plan.

Mr Yeo notes that while differentiating premiums is often a means to reflect the varying risks covered, another way to do so is to differentiate the payout.

"The Central Provident Fund (CPF) Life scheme is an example of the latter, where for the same savings amount in the CPF Retirement Account and the same CPF Life plan chosen, women get a lower monthly payout than men."

CPF Life is the national annuity scheme that pays monthly payouts for life from the eligibility age.

Eight tips for women considering health plans

Ms Ho suggests identifying, understanding and addressing one's insurance needs via a fact-finding process. After all, there is no one-size-fits-all solution in health insurance and different products offer unique benefits.

Mr Yeo says some goals may include looking for medical coverage, protection against death, disability and critical illness, or planning for retirement.

"These goals can also be determined by our financial planners through a needs analysis to ensure your financial goals are met holistically."

It is prudent to determine the amount you can set aside, as the premiums usually increase with your age band, says Ms Ho.

Besides getting your coverage early while you are still healthy, check your family's medical history, or if you have a pre-existing medical condition.

If so, this condition may be excluded from your health plan, or loading may be charged where you are subject to additional premiums, Ms Ho adds.

Ms Theresa Wu, head of protection at Prudential Singapore, advises women to pay heed to female-specific illnesses such as breast and ovarian cancers.

"You may also wish to obtain maternity or pregnancy-related coverage, if you are planning for a family.

"Such coverage protects against maternity and newborn-related complications and can provide much-needed assurance to a mother," she adds.

Studies show that some female-specific conditions like breast cancer are striking women earlier.

Ms Wu says buying coverage early on will ensure you are fully protected and in a position to claim if illness strikes.

Most plans offer fringe benefits like free medical check-ups.

A big part of taking care of one's health is going for routine health screening, so always look out for such extra value-added services that come with the plan you are considering, adds Ms Wu.

Working mothers and caregivers should remember that their companies' health insurance may not be portable when they change jobs and may cease if they leave the workforce to look after their children or dependants.

It is thus prudent to have personal health insurance, says Ms Ho.

Mr Yeo says it is important for customers to be comfortable with the insurance policy they choose.

Some insurers, including Income, provide coverage tailored for different life stages.

"We recommend that our customers undergo a financial review every two years as we understand that lifestyle choices change through time and it is more meaningful to tailor insurance coverage and financial plans accordingly.

"From there, we will provide an analysis and adapt their plans to suit their lifestyle and financial choices," he adds.​​


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