Disability Income Insurance

[Entendre]

I have been a silent reader for a long time now, so I just wanted to contribute my own 2cents back to the community in order to help anyone who's looking at this rarely known product.

In SG market, we have only 3 insurers who offer such insurance - AIA, Aviva, Great Eastern. Agents do not know the terms well and GE was not even interested in following up to my e-mail to the company. So this post will focus on comparing AIA and Aviva.

My details: ANB 26yo, Female non-smoker, Class 2 job, 3k sum assured

Aviva: $500-700 p.a depending on the deferment and escalating %
AIA: $1000 p.a after Vitality discount
​

Most people in the shinythings or BBCWatcher club will be attracted to Aviva's 35% off to minimize cost, but I discovered a suspicious clause in the product summary which I think everyone should be aware of

the Total Disability Benefit payable is $500 and will increase at a rate of 3% per annum until it reaches the maximum benefit.

No matter what is your sum assured, the initial benefit payable will only be a paltry sum, and that is why they offer the 35% discount only for sum assured above 3k in order for the insurer to maximize their premiums and minimize payouts.

In the end, I decided to go for AIA despite the expensive premiums because I was turned off by the sneaky Aviva and unresponsive GE.

Product Summary for AIA Premier Disability Cover

• first 24months disability is for own occupation, thereafter it is occupation that you are suited for (not the most ideal but a common qualifier based on worldwide insurer standards)
• deferment period is only 2 months (very short, hence expensive) and these 2 months benefit will be paid for in the third month
• disability benefit is insured amount, which is capped at 75% of income
• disability will be pro-rated on a daily basis if it's not for the full month
• recurring disability has no deferment period
• 6x sum assured rehab benefit
• 12x sum assured death benefit
• 24x sum assured catastrophic disability benefit (loss of eye(s) or limb(s))

Please do your own due diligence and it would be great if there's someone who can chip in on GE's plan as I am still in my free-look period.

TL;DR Avoid Aviva Ideal Income, they do not pay out the full sum assured.

 

[kram62]

I have been a silent reader for a long time now, so I just wanted to contribute my own 2cents back to the community in order to help anyone who's looking at this rarely known product.

In SG market, we have only 3 insurers who offer such insurance - AIA, Aviva, Great Eastern. Agents do not know the terms well and GE was not even interested in following up to my e-mail to the company. So this post will focus on comparing AIA and Aviva.

My details: ANB 26yo, Female non-smoker, Class 2 job, 3k sum assured

Aviva: $500-700 p.a depending on the deferment and escalating %
AIA: $1000 p.a after Vitality discount
​

Most people in the shinythings or BBCWatcher club will be attracted to Aviva's 35% off to minimize cost, but I discovered a suspicious clause in the product summary which I think everyone should be aware of



No matter what is your sum assured, the initial benefit payable will only be a paltry sum, and that is why they offer the 35% discount only for sum assured above 3k in order for the insurer to maximize their premiums and minimize payouts.

In the end, I decided to go for AIA despite the expensive premiums because I was turned off by the sneaky Aviva and unresponsive GE.

Product Summary for AIA Premier Disability Cover

• first 24months disability is for own occupation, thereafter it is occupation that you are suited for (not the most ideal but a common qualifier based on worldwide insurer standards)
• deferment period is only 2 months (very short, hence expensive) and these 2 months benefit will be paid for in the third month
• disability benefit is insured amount, which is capped at 75% of income
• disability will be pro-rated on a daily basis if it's not for the full month
• recurring disability has no deferment period
• 6x sum assured rehab benefit
• 12x sum assured death benefit
• 24x sum assured catastrophic disability benefit (loss of eye(s) or limb(s))

Please do your own due diligence and it would be great if there's someone who can chip in on GE's plan as I am still in my free-look period.

TL;DR Avoid Aviva Ideal Income, they do not pay out the full sum assured.

Thanks for sharing, however you have totally misunderstood the clause about the S$500 payout in Aviva's policy and the way you present it is plain wrong.

The S$500 cap on payout is only when you get disabled while not employed. If you are employed, the payout is not limited to S$500, it is the sum assured capped at 75% of your salary, as expected. There is still a very significant shortcoming related to this clause (and the reason why I have chosen to go with GE instead, more info below) but is is not the same at all compared to what you insinuated in your post.

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I have myself been comparing Aviva and GE's policies this month. Here is the product summary of the two policies:

Aviva IdealIncome: https://imgur.com/a/y74aksY (read it carefully before posting!)

GE PayAssure: https://imgur.com/a/4EVNtIW (read it carefully before posting!)

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The key thing to understand is that both policies define two kind of benefits: Working Benefit and Non-Working Benefit.

• When you become disabled while employed*, you are entitled to the Working benefit.
• If you become disabled while not being employed*, you are only entitled to the Non-Working Benefits.

(* as we will see, the definition differs between insurers)

The major difference between Aviva and GE here is the definition and amount of the payout in the case of the Non-Working Benefit:

• Aviva defines it as being unable to perform 3 out of 6 daily activities and the payout is fixed at S$500 (I asked by email to double check and they confirmed that is is only S$500),
• GE defines it as being unable to perform 2 out of 6 daily activities and sets the payout at the minimum between 50% of sum assured or S$4000 (for example if sum assured is S$6000, then non-working benefit is S$3000, but if Sum assured is S$9000, then it is not S$4500 but the cap of S$4000 instead)

The second major difference between GE and Aviva is for the partial disability benefit:

• Aviva only kicks-in if your new income is less than 75% of previous income
• GE kick-in if your new income is less than 85% of your previous income

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Now for the rest of the main characteristics:

Aviva IdealIncome:

• During working period (i.e. if you were employed at the time of the disability) total disability is defined as: for the first 24 months: being unable to perform his/her own occupation, then being unable to perform any occupation for which you are suited. (common to many insurers)
• During non-working period: the total disability definition changes to being unable to perform 3 out of 6 activities of daily living (Washing, Dressing, Transferring, Mobility, Toileting, Feeding). In that case, the payout is a mere S$500 !!!
• Partial Disability: for when you are able to return to some kind of activity, where the income is less than 75% of previous income. Payout sum is based on your normal total disability benefit pro-rated like this: (previous income - current income)/(previous income)
• Rehabilitation benefit: 3x total or partial benefit (subject to insurer approval)
• Can choose between 3% escalating benefit or not escalating benefit
• Can choose between 2, 3 or 6 months deferment period
• Death benefit: lump sum S$5000

GE PayAssure:

• During working period (i.e. if you were employed at the time of the disability) total disability is defined as: for the first 24 months: being unable to perform his/her own occupation, then being unable to perform any occupation for which you are suited. (common to many insurers)
• Important: the definition of the Working Disability includes the 6 month period after the start of a non-working period. This means that if you are unemployed for less than 6 months, and you become disabled, you can still benefit from the benefit as if you had been employed. (Exact wording: Working Disability means in a Working Period or the first 180 days of a Non−Working Period, the life assured is totally unable by reason of sickness or injury to perform the Material Duties of life assured's Own Occupation).
• After 6 months of non-working period: the total disability definition changes to being unable to perform 2 out of 6 activities of daily living (Washing, Dressing, Transferring, Mobility, Toileting, Feeding). In that case, the payout is the lesser of 50% of sum assured or S$4000 (see example above).
• Partial Disability: for when you are able to return to some kind of activity, where the income is less than 85% of previous income. Payout sum is based on your normal total disability benefit pro-rated like this: (previous income - current income)/(previous income)
• Rehabilitation benefit: 3x total or partial benefit (subject to insurer approval)
• Cannot choose between 3% escalating benefit or not escalating benefit. They do not propose the 3% escalating benefit.
• Can choose between 2, 3 or 6 months deferment period
• Death benefit: 6 times the Working Disability Amount (sum assured). For example for S$3500 sum assured, this means a lump sum of S$21000.

There is a lot more to read in the Product Summaries, please do your due diligence. I am just a regular retail customer and have limited knowledge in insurance. I may have misinterpreted something above so do not take anything I said as the "Truth".

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Now for the quotes I received:

30 ANB Male non-smoker
S$3500 sum assured, 180 days pre-benefit period
insure till 65 years-old, no escalating benefit:

• Aviva (before 35% discount): S$ 617 / year
• GE: S$527 / year

Note that in both cases, the premiums are not guaranteed in the future (may increase with 30 days notice).

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While I am settled in Singapore for any foreseeable future, my family is not from Singapore. Thus I also asked about what happens if upon becoming disabled I wish to move back to the country where my family lives (for better support as being disabled is a very tough situation).

For GE, if you stay totally disabled, the payout will continue wherever you go.
If you are able to work again and qualify for partial disability benefits, then this is the same: the payout will continue, and it is not required that the new job is in Singapore.

For Aviva, the answers were always that it is subject to approval and the wording implies that where you are should continue to give similar (or better) standards of evidence, care, treatment, etc. compared to those which would be available in Singapore.

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Furthermore, I also asked what happens to the policy if I need to move out of Singapore for some reason before occurrence of disability.

In that case, the policy may continue upon insurer's approval (better to notify before departure, in any case at most 30 days after departure otherwise policy is void). From the answers I received, it seems that as long as the destination is in a country where the conditions of life are comparable to developed cities like Singapore, the chances are good.

In the case of Aviva, I was provided a list of countries where the premium needs not being adjusted, and another list where there is a 25% loading of the premium. Other countries are assessed on a case by case basis.

In the case of GE, I was not given a list, but I was told the decision is based on the economic and stability climate of the country at the point in time. Major cities and developed countries are more likely to be accepted, and the representative told me he had done it before with some clients.

 

[BBCWatcher]

Entendre and kram62, thank you both for your reports. They're quite helpful.

By the way, when given a choice I would choose the longest available elimination period (waiting period) since you really ought to have emergency reserve funds that carry you for that length of time. Otherwise you'll just need to pay a higher premium, and I don't think that's a wise use of precious premium dollars. I really wish AIA, in particular, offered a longer elimination period (6 months for example) as an option.

I'd also like to see automatic sum assured escalation that's linked to the CPI or, failing that, set at 2%/year, but with the choice to waive any escalation. For example, if you start out with $3,000/month sum assured, the next year you get your premium notice and the sum assured is automatically set to $3,060/month (+2%) -- but you can contact the insurer and ask to keep the sum assured at $3,000/month if you wish (and for a slightly lower premium). This automatic sum assured escalation would combat inflation, something that's very important when you're dealing with payouts that could be multi-decade. Aviva hasn't gotten this part quite right either since they don't offer escalation on the starting sum. The 75% limit would still apply here, of course.

Anyway, the perfect policy isn't available yet, but there are at least a couple good choices here.

 

[Entendre]

Thanks for sharing, however you have totally misunderstood the clause about the S$500 payout in Aviva's policy and the way you present it is plain wrong.

The S$500 cap on payout is only when you get disabled while not employed. If you are employed, the payout is not limited to S$500, it is the sum assured capped at 75% of your salary, as expected. There is still a very significant shortcoming related to this clause (and the reason why I have chosen to go with GE instead, more info below) but is is not the same at all compared to what you insinuated in your post.

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Thanks for your response! Appreciate the alternative viewpoint.

But I don't want to assume that there are two different benefits being paid out. In the product summary you uploaded, the first line only mentions one term Total Disability Benefit. It does not make any distinction between the two periods working or non-working. May I know if this information was presented by the agent or confirmed in writing by the underwriter? If it was in black and white I apologize for missing that out. Otherwise, I take it at face value that there is only one Total Disability Benefit that starts at $500 only.

 

[kram62]

Entendre and kram62, thank you both for your reports. They're quite helpful.

By the way, when given a choice I would choose the longest available elimination period (waiting period) since you really ought to have emergency reserve funds that carry you for that length of time. Otherwise you'll just need to pay a higher premium, and I don't think that's a wise use of precious premium dollars. I really wish AIA, in particular, offered a longer elimination period (6 months for example) as an option.

Yes exactly, I've built and set aside my 12-months-of-expenses emergency fund in the last months. Thus I only wanted a policy with the longest pre-benefit period. The goal of this policy is to cover for life-long disability preventing me to have decent income. Short term disability will be covered by my emergency fund.

I'd also like to see automatic sum assured escalation that's linked to the CPI or, failing that, set at 2%/year, but with the choice to waive any escalation. For example, if you start out with $3,000/month sum assured, the next year you get your premium notice and the sum assured is automatically set to $3,060/month (+2%) -- but you can contact the insurer and ask to keep the sum assured at $3,000/month if you wish (and for a slightly lower premium). This automatic sum assured escalation would combat inflation, something that's very important when you're dealing with payouts that could be multi-decade. Aviva hasn't gotten this part quite right either since they don't offer escalation on the starting sum. The 75% limit would still apply here, of course.

Yes I was also hoping for this but this does not exist yet.

Anyway, as you mention, you can always call to change your sum assured up later (for example after a significant raise of your normal income) to adjust it to the inflation. I would not do this yearly (I don't think the insurer would like it), but every few years if the average income has increased, then it makes sense. Premiums will be increased accordingly of course.

 

[Entendre]

Entendre and kram62, thank you both for your reports. They're quite helpful.

By the way, when given a choice I would choose the longest available elimination period (waiting period) since you really ought to have emergency reserve funds that carry you for that length of time. Otherwise you'll just need to pay a higher premium, and I don't think that's a wise use of precious premium dollars. I really wish AIA, in particular, offered a longer elimination period (6 months for example) as an option.

I agree that short term disability coverage is expensive. But for women the likelihood of STD is far greater and I find it wise to mitigate against pregnancy complications which commonly result in women being unable to work during our youth when we need to provide for our kids. This is my own niche consideration which may not apply to everyone. Afterwards, I will likely switch over to GE 6 month deferment.

 

[kram62]

Thanks for your response! Appreciate the alternative viewpoint.

But I don't want to assume that there are two different benefits being paid out. In the product summary you uploaded, the first line only mentions one term Total Disability Benefit. It does not make any distinction between the two periods working or non-working. May I know if this information was presented by the agent or confirmed in writing by the underwriter? If it was in black and white I apologize for missing that out. Otherwise, I take it at face value that there is only one Total Disability Benefit that starts at $500 only.

I understand what you mean. I've been confused exactly for the same reason, the product summary of Aviva is in my opinion very poorly formatted (especially compared to GE's).

I did ask in writing the following:

Me: Just to make sure I understood the definitions correctly: for a purchased benefit of SGD 3500, the corresponding Non-Working Total Disability Amount is just SGD 500?
Answer from Aviva: Yes

I do not have a written explicit statement that the "Working Total Disability Amount" is the sum assured, but if it were not, the policy does not make any sense at all.

So I assume this is only a bad formatting of the Policy Summary, but if you are right and that it is not the case, that would be a very grave misguidance towards the policyholder..... (personally, I would be ready to bet that's just a formatting mishap, it does not make any sense otherwise)

 

[Entendre]

So I assume this is only a bad formatting of the Policy Summary, but if you are right and that it is not the case, that would be a very grave misguidance towards the policyholder..... (personally, I would be ready to bet that's just a formatting mishap, it does not make any sense otherwise)

For me I will only trust the legal document and avoid this product like the
plague!

Anyway even if we give Aviva the benefit of the doubt that the $500 only applies to non working period, note that a long term disability will very likely result in unemployment. The whole purpose of this insurance is to substitute employment pay with insurance payout. So the non working period payout is actually the most crucial factor and I hate to see any insurer cut corners.

 

[BBCWatcher]

Anyway, as you mention, you can always call to change your sum assured up later (for example after a significant raise of your normal income) to adjust it to the inflation. I would not do this yearly (I don't think the insurer would like it), but every few years if the average income has increased, then it makes sense. Premiums will be increased accordingly of course.

That's possible, but sum assured increases will be subject to underwriting. I wish sum assured escalations that merely kept pace with inflation were not subject to underwriting, that's all.

I agree that short term disability coverage is expensive. But for women the likelihood of STD is far greater and I find it wise to mitigate against pregnancy complications which commonly result in women being unable to work during our youth when we need to provide for our kids.

But isn't this a great argument in favor of an emergency reserve fund?

Also, apparently Aviva explicitly excludes pregnancy in its policy language. (Another problem with Aviva, at least in the MINDEF/SAF variant of their DII. And the government wonders why Singapore's birth rate is low. Add this one -- insurers' pregnancy exclusions -- to the pile of reasons.) I'm not sure about Great Eastern or AIA.

 

[BBCWatcher]

Anyway even if we give Aviva the benefit of the doubt that the $500 only applies to non working period, note that a long term disability will very likely result in unemployment. The whole purpose of this insurance is to substitute employment pay with insurance payout. So the non working period payout is actually the most crucial factor and I hate to see any insurer cut corners.

Yes, I agree. Aviva's zero tolerance for bouts of unemployment is so severely limiting it's unacceptable. It's a way for Aviva to offer a lower premium and not in a good way.

 

[kram62]

For me I will only trust the legal document and avoid this product like the
plague!

You are 100% right. Do note that the Product Summary is not binding. Only the Policy Letter is. I do not have it yet for GE. (Should arrive soon)

Anyway even if we give Aviva the benefit of the doubt that the $500 only applies to non working period, note that a long term disability will very likely result in unemployment. The whole purpose of this insurance is to substitute employment pay with insurance payout. So the non working period payout is actually the most crucial factor and I hate to see any insurer cut corners.

Just to make sure the terms are clear for you: "Working" and "Non-Working" in these policy refers to your employment status at the time you become disabled...

In a very simplified way:

If you were employed at the time you become disabled, then you receive the Working total/partial disability amount up to the term of the policy (for example 65 years old).

If you were not employed at the time you become disabled*, then you receive the Non-Working total/partial disability amount up to the term of the policy (for example 65 years old).

* (GE has an additional 6-month grace period if you stop being employed, Aviva does not seem to have this)

 

[Entendre]

BBCWatcher, thanks to your advice, I do have an emergency fund. Saving half of my yearly disability insurance premiums into this fund is not going to outweigh the cost of my short term disability and the payouts will be far more worth it to me for this period. After I have children I think that only long term disability coverage is necessary as the possibility of short term disability is greatly reduced. Disability income is more expensive for females I think for this reason. AIA and GE both exclude pregnancy but does not exclude pregnancy complications while Aviva explicitly excludes pregnancy complications as well.

 

[Entendre]

Just to make sure the terms are clear for you: "Working" and "Non-Working" in these policy refers to your employment status at the time you become disabled...

Thanks for clarifying. I was under a different and perhaps wrong impression that the employment condition applies throughout the entire period of disability.

But even the GE PayAssure has a qualifier that

the life assured shall at times during any period of Disability...satisfy the definition of Working Disability or Non-Working Disability.

Let's say I suffer a back injury that prevents me from working as I have limited mobility. I get fired. Then my doctor certifies that this back injury will never fully recover and my mobility is restricted. I thought that means I qualify for the working disability in the first instance, and subsequently only for the reduced Non-working Disability.

Please correct me if I'm wrong.

 

[yokoyokoyoko]

I'm so sorry to bother --- am a noob here.

Does anyone have any opinions on the Aviva Mindef-MHA Disability Insurance (vis-a-vis the two plans above?) Does it have the same issues as the Aviva plan discussed above?

Thank you so much in advance!

Link (Not enough posts to put, sorry) aviva[dot]com[dot]sg/en/mindef-and-mha/disability-income/

 

[kram62]

I'm so sorry to bother --- am a noob here.

Does anyone have any opinions on the Aviva Mindef-MHA Disability Insurance (vis-a-vis the two plans above?) Does it have the same issues as the Aviva plan discussed above?

Thank you so much in advance!

Link (Not enough posts to put, sorry) aviva[dot]com[dot]sg/en/mindef-and-mha/disability-income/

I haven't checked it because I am not eligible. I've seen some discussions about it in other threads though. Maybe if you search for it you may find those posts again.

 

[BBCWatcher]

As of January 8, 2019, here is the list of disability income insurance (DII) products available in Singapore (in alphabetical order):

AIA Premier Disability Cover
Aviva IdealIncome
Aviva Group Disability Insurance (available only to qualified MINDEF and MHA group members)
Great Eastern Pay Assure

Per the earlier discussion, Aviva IdealIncome (and possibly also its Group Disability Insurance) has some severe problems and restrictions in its policy language, so I recommend keeping the AIA and Great Eastern products on your short list for consideration.

I should also point out that there are a couple offshore DII sellers available to residents of Singapore. As a notable example, Clements Worldwide based in Washington, D.C., markets “European style” DII underwritten by Lloyds of London, with premiums and payouts denominated in U.S. dollars. Their DII policy offers a customizable waiting period that can be as long as 24 months (good for premium reduction and/or for those with some employer-provided short-term disability coverage), up to 10 years (120 months) of monthly disability payouts, and a final lump sum payout if the disability persists for the full 120 months (but not beyond age 65, so this 120 month payout period is potentially truncated for those age 53 and above). Annual premiums are not waived when you’re disabled, please note, so you should include the premium in your sum assured. Another difference is that their coverage is portable across practically the whole world, although oddly coverage ends if you move specifically to the United States (if you’re not already disabled and at least within the waiting period), presumably because Clements/Lloyds is not licensed to sell DII across the many states within the U.S. As long as you file a claim (and enter the waiting period) strictly before you move to the U.S. (or don’t move to the U.S.), that’s evidently OK.

 

[YKOHYL]

Hi,

If we are above 40 yr old and is already covered under eldershield and aviva care plus, buying disability income insurance is necessary?

 

[Anarchy]

DI is to protect you while you are working. When you are sick and recuperating, DI will kicks in to help. DI is not very useful when you are UNEMPLOYED.

Age does not matter here. As long as employed, get DI. No employment get something else.

 

[bullshitregister]

1. I am not sure of the differences between Aviva IdealIncome and Aviva-SAF DI so please do correct/highlight what are the critical reasons for and against. (I went through the product summaries of both, but perhaps the real differences only come up in policy documents?)

2. On the assumption that I am ok with 50% income replacement, all other things being equal (ie. till age 65, deferred period of 6 months), I have made the below table which shows the yearly amounts for Aviva vs Aviva-SAF. As you can see in the earlier years, Aviva SAF is cheaper, but it quickly catches up over 10 years and from then on becomes more expensive. Does it make sense to save earlier or does it make sense to have a flat rate over the next 25 years?

(Unable to post - h t t p s://ibb.co/D8XzNQb)

(I have used an income of $20K a year so that it qualifies for the 35% premium discount on Aviva IdealIncome, to generate the above numbers from MoneyOwl)

3. Aviva IdealIncome does not have the 3% escalating, not sure if that is worth the extra premium?

 

[kram62]

Any insurance agent around that could give me (here or in PM) a DII quote for:

Female ANB 30, non smoker, class 1 occupation (office)
$4000 / $3500 sum assured
Maximum pre benefit period (180 days if possible)
With / without escalating benefits (if available)

?

(I know someone interested to buy coverage)