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Investnewbie82 27-11-2019 12:12 PM

Hi BBC,

Can i check for disability income, I'm comparing between GE's Payassure vs AIA premier disability cover, am I looking at the right plans? What do you think of these 2 plans?

Also in general, say after 2 years, there is a compensation up to the monthly income insure. They illustrate by say if insure 5000, if take up lower paying Job of 3k, they top up 2000.

So who defines what job I need to take up? Like do we have a choice what jobs to take? What if we cannot find any job in the defined category? Hope I'm making sense.

Thanks!

BBCWatcher 28-11-2019 09:57 PM

Quote:

Originally Posted by Investnewbie82 (Post 123902610)
Can i check for disability income, I'm comparing between GE's Payassure vs AIA premier disability cover, am I looking at the right plans? What do you think of these 2 plans?

Aviva is the third carrier in Singapore that sells DII policies.

Quote:

Also in general, say after 2 years, there is a compensation up to the monthly income insure. They illustrate by say if insure 5000, if take up lower paying Job of 3k, they top up 2000.

So who defines what job I need to take up? Like do we have a choice what jobs to take? What if we cannot find any job in the defined category?
Your degree of disability determines whether you're able to take another job and, if so, what work responsibilities you can assume.

DII isn't unemployment insurance (UI), please note. Singapore doesn't have UI.

kjj389 05-12-2019 01:12 PM

Quote:

Originally Posted by EagleToThesSky (Post 116261494)

Sent from Samsung SM-G955F using GAGT

The image is not clear. Can you share the excel file or a bigger image. Thanks.

kjj389 05-12-2019 01:30 PM

Hi BBCW,

Nice to see your replies in this thread regarding CPF SA shielding. Need some clarification as I'm approaching 55 in few months. I have OA 120K, SA 200K and MA 57.2K. I've already tried shielding by buying 1K Nikko AM Shenton Short Term Bond Fd from SA though my POEMS acct to test.

If I shield 160K from SA (keeping 40K), my RA amount when it is created would be 120K + 40K, which is still less than the current FRS. What would the CPFB do in that case?

1) Do they force me to pledge property?
2) move balance amount from SA after unshielding?
2) Allow me to top up RA using cash? If yes, Can I get tax saving?

I could not find this scenario in this thread.

Thanks

BBCWatcher 06-12-2019 07:27 AM

Quote:

Originally Posted by kjj389 (Post 124018258)
If I shield 160K from SA (keeping 40K), my RA amount when it is created would be 120K + 40K, which is still less than the current FRS. What would the CPFB do in that case?

1) Do they force me to pledge property?

No.

Quote:

2) move balance amount from SA after unshielding?
No, not as I understand it, but there might (or might not) be a small withdrawal restriction if you don't make a property pledge or don't have a property charge.

Quote:

2) Allow me to top up RA using cash? If yes, Can I get tax saving?
Yes, you have the opportunity to top up your new Retirement Account up as high as the Enhanced Retirement Sum. Because your RA will be slightly "underfunded" you have that much more room for a cash top up. There will not be tax relief, however, because you've already reached the Full Retirement Sum in your Special Account.

Another option if you used OA funds for housing is to repay some number of OA dollars -- enough to fund your RA to the Full Retirement Sum. Then add whatever cash top up you wish beyond that. If you're somehow bothered by the money you owe yourself from your home, you can do that. Personally I'd just use cash and keep the OA repayment option as a future "piggybank" option (the ability to deposit into a 2.5% interest earning OA).

kjj389 11-12-2019 01:18 PM

Quote:

Originally Posted by BBCWatcher (Post 124028373)

Another option if you used OA funds for housing is to repay some number of OA dollars -- enough to fund your RA to the Full Retirement Sum. Then add whatever cash top up you wish beyond that. If you're somehow bothered by the money you owe yourself from your home, you can do that. Personally I'd just use cash and keep the OA repayment option as a future "piggybank" option (the ability to deposit into a 2.5% interest earning OA).

Thank you. I've another doubt. After RA is set up, I can top up RA to the prevailing FRS (since FRS increases every year) up to age 65 and get tax benefit also. However, considering the 4% interest, 176K becomes 183,040 which is more than the next year FRS. Do they consider interest when calculating the tax benefit for top up?

BBCWatcher 11-12-2019 02:20 PM

Quote:

Originally Posted by kjj389 (Post 124103944)
After RA is set up, I can top up RA to the prevailing FRS (since FRS increases every year) up to age 65 and get tax benefit also. However, considering the 4% interest, 176K becomes 183,040 which is more than the next year FRS. Do they consider interest when calculating the tax benefit for top up?

According to IRAS, members age 55 and above are eligible for tax relief on RA top ups if there's a gap between the current Full Retirement Sum and:

Quote:

Originally Posted by IRAS
Retirement Account (RA) savings*

*RA savings refers to the cash set aside in the RA (excluding amounts such as interest earned, any government grants received) plus amounts withdrawn.

So evidently interest is not counted in determining whether there's a top up tax relief opportunity. Special Account balances aren't counted either, which is really quite interesting. Hypothetically, you could celebrate your 55th birthday, see your Retirement Account funded to the Full Retirement Sum, have $500K remaining in your Special Account, and be eligible to make a top up to your Retirement Account the following January when the FRS increases, with tax relief.

That said, you probably don't want to hold back on your RA top ups simply to fit within tax relief limits. You evaluate the deals on offer on their own terms, and the RA top up offer with or without tax relief is an attractive offer.

BBCWatcher 11-12-2019 02:34 PM

Annual Tax Relief Reminder
 
Kjj389's question reminds me to remind all that it's December, and that means we're fast approaching the deadline to claim tax reliefs based on 2019 events ("Year of Assessment 2020"). You may wish to consider CPF top ups (MediSave, Special, and/or Retirement Accounts for yourself and among qualified family members, as applicable) and SRS account contributions for tax relief, as notable examples.

The absolute "drop dead" deadline for making CPF top ups within 2019 is evidently 10:00 a.m. on December 31, 2019, and that's only if you physically hand a paper check to a CPF customer service officer. It's also still risky, so I wouldn't wait until the last possible moment. Watch out for daily fund transfer limits that might restrict your top up.

The deadline for SRS account contributions is whatever your SRS bank's closing time is on December 31, 2019 (which falls on a Tuesday this year). That can be as late as sometime in the evening (check with your SRS bank), but again I wouldn't wait until the last possible moment.

December 31, 2019, is also the deadline for getting some tax relief from qualified charitable contributions.

In past years CPF closed its online systems late on December 31 and kept them closed throughout much of the next day (January 1). Annual interest will be officially credited on December 31, but you won't necessarily see it appearing in your online statement until a couple days into the new year.

cassowary18 11-12-2019 04:22 PM

Question about DII: I'm currently on MINDEF Aviva Group Term Life Insurance plan. They have a rider for DII that pays 50% of income until age 70. Is that enough or should I top up another DII plan (maybe another 25%, to 75%)? Is that allowed?

alwayslearning 16-12-2019 05:22 PM

Hello, I would like to confirm the following:

(1) Top-up to SA is allowed and still tax-deductible even though one has hit the CPF annual limit of $37,740?

(2) If you over contribute to MA (after hitting the CPF annual limit), the amount will be returned to you around Feb 2020. Is this in the form of a cheque?

Thank you.

BBCWatcher 17-12-2019 01:35 AM

Quote:

Originally Posted by cassowary18 (Post 124107027)
Question about DII: I'm currently on MINDEF Aviva Group Term Life Insurance plan. They have a rider for DII that pays 50% of income until age 70. Is that enough or should I top up another DII plan (maybe another 25%, to 75%)? Is that allowed?

Whether it's enough depends primarily on your foundational lifestyle needs in the event of disability, any contributions you still need to make to pin down retirement income security (CPF LIFE in particular), and to what degree (if any) you can self-insure. Don't forget to take inflation into account since the monthly payout under that plan is a fixed nominal amount and will lose purchasing power over time.

Yes, you are allowed to "top up" that plan with a second DII policy, but you cannot exceed your insurable percentage of salary/wages with either carrier. In other words, if your current plan is maxed out (50% of current earnings from work), then the most you can get with a second policy is 25% of current earnings from work more (a total of 75% of current earnings from work).

Quote:

Originally Posted by alwayslearning (Post 124179391)
Hello, I would like to confirm the following:

(1) Top-up to SA is allowed and still tax-deductible even though one has hit the CPF annual limit of $37,740?

Yes, SA and RA top ups do not need to fit within the CPF Annual Limit, and the CPF Annual Limit has no bearing on whether you qualify for tax relief for such top ups.

Quote:

(2) If you over contribute to MA (after hitting the CPF annual limit), the amount will be returned to you around Feb 2020. Is this in the form of a cheque?
Probably, but CPF is in the process of adopting the government's overall goal of 100% paperless payments. If it's a paper check today, in the not-to-distant future it likely won't be.

Plewee 28-12-2019 01:29 PM

Hi BBCW, thanks for all the advice. Being relatively new to Singapore, your posts helped me sort of Direct Life Term for my family.
One thing I wonder about though is eligibility for DII for foreigners. Would it be useful for me (not a PR, both me and wife are foreigners on EP/DP)? Or would I have to leave Singapore “anyways” once I can no longer work. Would a DII still pay for me when unable to work and no longer living here?

BBCWatcher 28-12-2019 03:47 PM

Quote:

Originally Posted by Plewee (Post 124347335)
One thing I wonder about though is eligibility for DII for foreigners.

The DII issuing carriers in Singapore will issue policies to foreigners. That includes EP holders and DP holders working with Letters of Consent (LOCs). (Yes, your spouse holding a DP can take out a DII policy if your spouse has employment income. "Don't forget your spouse.") So there shouldn't be any access problem as such.

Quote:

Would it be useful for me (not a PR, both me and wife are foreigners on EP/DP)? Or would I have to leave Singapore “anyways” once I can no longer work. Would a DII still pay for me when unable to work and no longer living here?
All the local DII carriers will eventually drop you once you leave (or are forced to leave) Singapore. As you probably know, if your employer very suddenly fires you, you have to leave Singapore within 30 days. That possible quick march out of Singapore is an overarching problem, and one side effect is that it can make insuring against disability less than ideal.

Most of the policies tolerate some unemployment and some time outside Singapore, and Great Eastern's DII seems to be the most tolerant. Really you just have to get copies of the policy letters and read them critically, considering "What if?" scenarios involving departure from Singapore and other scenarios. In particular, would you still have some reasonable coverage time after departure, so you can get covered elsewhere? Would benefits still be paid if you become disabled in that time window after departure? How are benefits paid? (Probably into a bank account in Singapore, so keep one open. Could you spend those benefits in a low cost way from outside Singapore?) If there are medical exams to verify and re-verify disability, how would that work outside Singapore? Who would pay for those exams, and who can conduct them? (Would you have to fly to Singapore for periodic assessments?!?!)

Here are some other things to think about, in no particular order:

1. If you're eligible to upgrade to a Personalised Employment Pass (PEP), consider doing that at some point, particularly if you start to get signals that your employer may want to drop you in the months ahead. If you're approved for a PEP it's a 3 year "ticket," and it tolerates bouts of unemployment in Singapore of up to 6 months (up from 30 days), at least giving you more time to relocate more gracefully -- for children to finish up a school term, for example. You can only get one PEP per lifetime, though.

2. I've mentioned before that it's possible to buy "offshore" DII. I've decided a non-local DII policy is best for me, although I can't say it's ideal. Most of the "offshore" DII policies are "European style," which is to say they pay disability benefits for up to 10 years then a lump sum if you're still disabled -- and that's that. I think I'd prefer straight monthly benefits to age 65, but I can live with "European style." One possible advantage with the non-local DII policy is that it's global, or at least nearly so. The more global aspect of the policy isn't just for EP and DP holders. It's for PRs and citizens, too, who value that feature. For example, if you're a citizen who might spend 5 years working in Silicon Valley at some point in your career, the local DII carriers are probably going to struggle with that.

3. It's also sometimes possible to continue social insurance coverage (which tends to have a stricter definition of disability and isn't as generous, but it's better than nothing) from a home country even while you live in Singapore. Some countries allow their expats to continue to contribute to their social insurance systems voluntarily, and other countries (notably the U.S.) don't but still have expats who receive (or can legally "engineer") social insurance taxable income.

4. There are also occasions when your employer is posting you to Singapore for an assignment, keeping you (to some degree anyway) on your home country's roster, including on your home country employer's disability income insurance. I had (past tense now) some great employer group DII coverage with an option I exercised to "buy up" to cover a higher percentage of salary, and for a while I was able to hang onto that coverage even while working in two other countries. Sadly, I couldn't keep that coverage, but the coverage was tied to the specific employer anyway, and it's not solely my choice to work for a particular employer. "Portable" DII has that advantage, that it continues when you change employers as long as your time between jobs isn't too long.

5. As I hinted above, give some thought to what happens if your significant other were to become disabled and on the impact to your spouse if you were to become disabled, including where you and your spouse would want to be in that event, either event. In other words -- and I've saved the "best" for last -- try to imagine the unimaginable(s), then work backward from there to figure out whether and how you can insure. For example, if almost certainly your household is going move to a house upstairs or across the street from your sister-in-law's house (in Country X, not in Singapore) if your spouse were to become disabled, OK, fine, that's the plan, now figure out whether and how insurance can help. And if you're not sure, OK, fine, mark that down as "not sure/need flexibility" then see whether and how insurance can offer sufficient flexibility.

kram62 30-12-2019 04:06 AM

To complete what BBC said before, when I searched for DII last year for me (foreigner on EP) and asked detailed information concerning the continued coverage in the case I leave Singapore, both aviva and great eastern replied that as long as the destination is a developed city with comparable risks, there should be no problem keeping the policy. Actually aviva provided me with a list of countries where there is no problem to keep the policy, another list where the premium is majored like 25%, the rest being case by case. At great eastern, the representative answered me in writing that keeping the DII when moving is usually not a problem unless you move somewhere where the risks are significantly different.

For more details, please see the threads about DII in this forum and look for my posts from last year, more or less at the same period (end December beginning January), I have compared aviva and great eastern in details (and decided to go with GE in the end).

BBCWatcher 30-12-2019 09:20 AM

Awesome, Kram62, thanks!

Note that you might not actually keep the Singapore issued DII policy in force after you leave Singapore if you're able to obtain decent or better DII coverage in your destination country. However, you want the choice, and you certainly don't want to be dropped suddenly, especially if you're disabled when you leave.

Another possible situation is that your employer provides short-term disability insurance and your home country offers strong disability insurance even for returning expats who are already disabled. The short-term coverage "bridges" until you get back to your home country, and then you pick up coverage there, even if disabled. If that particular combination provides enough coverage, and with a reasonable definition of disability, then maybe you don't need a DII policy issued in Singapore. Indeed, even if your employer in Singapore offers nothing, you might still be able to self-insure until you get back to your home country. I don't think the situation I'm describing is common, but it's possible.


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