FINANCIAL THOUGHTS
Money, Money, Money:
10 Things You Might Have Missed in 2018
Well, that is it for 2018. It could be either a long or a very short year for you but nevertheless; this year has come to a close.
A lot of things have happened and you might know of certain changes and implementations that have occurred during the year. If you missed it, here is an article to sum up things that you might have noticed happening.
#1. Introduction of CareShield Life
CareShield Life is a Long-term care insurance that will give you a monthly benefit when you are unable to perform at least 3 out of 6 Activities of Daily Living (ADLs). It is an enhancement from its predecessor, ElderShield.
The 6 Activities of Daily Living (ADLs):
Officially this has not been implemented yet but it was announced this year. It will only start in 2020. There are a few differences between the CareShield Life and ElderShield Scheme. They are:
- The starting age of policyholders
- The Payout Duration
- The Annual Payout Increment
Once you reach the age of 30, you are eligible for the CareShield Life scheme. That is a change from ElderShield, as you have to be 40 in order to participate in the scheme.
Payout duration for ElderShield will last your either 60 or 72 months. Whereas, for CareShield Life, it will be a lifetime of payouts.
ElderShield payouts are fixed which means it will remain the same through the payout period. However, for CareShield Life, the payouts will increase annually by 2%, which is the estimated amount.
Some current ElderShield policyholders will be given a choice of changing to the new CareShield Life scheme. And one good thing is that there will be certain subsidies and participation incentives that will help you in financing the CareShield Life scheme.
Just a head up, for those who are born in 1990, you will be eligible for the CareShield Life scheme. Yes, that means that you will be 30 years old by then. Thus, it shows if you are a “90s kid”, age is gaining up on you.
#2. Changes to Shield Plan Riders
In case you missed it, there will no longer be a fully paid rider. In other words, those who are buying the new riders would no longer be able to walk out of the hospital without paying a single cent.
Previously, insurers do offer fully paid riders to consumers but due to the changes that were announced in the first half of 2018, insurers will no longer be offering it anymore.
Your next question might be why.
Well, it is all due to the overconsumption of medical services. Will give you an example below.
A simple surgery that actually cost $5,000 was charged at $70,000. And it was fully reimbursed by the insurer. That is just one example.
The changes are to make the policyholder equally responsible for the total hospital bill. Therefore, there will be a certain amount of control over the expenses incurred. In other words, they want you to be involved in your own medical expenses.
Policyholders who already have the fully paid riders would not be affected for now. But those who bought the riders from 8 March 2018 will have to change to the new rider eventually on April 21, 2021.
#3. Changes to Sales Charge for CPF Investment Schemes
Good news for retail investors. The sales charge for the CPF Investment Scheme (CPFIS) has been reduced. And eventually, there will no longer be any more sales charge.
What it means that you have a better chance to earn a higher interest due to the fact of the smaller sales charge being implemented. You will get more units and that is something that you would want.
On a side note, there will be changes implemented for the wrap fee as well. A wrap fee is an amount charged to you, for services such as advisory, brokerage, and administrative services.
#4. Implementation of the CPF Self Awareness Questionnaire
There were a few changes to the CPF Investment Scheme (CPFIS). And the implementation of the CPF Self Awareness Questionnaire (SAQ) is one of them.
This questionnaire might be seen as a hassle to certain investors as you have to answer a few questions prior to opening a CPFIS banking account with one of the banks.
But if you see it from a different angle, it is something good. It will question you of your investment knowledge, time horizon, and several other things before you start investing. This definitely tests you and also gives you a brief idea of what you are getting into.
Investing is something that involves risk and returns. Without a doubt everyone wants returns or in other words, make money. But at the same time, a risk is something associated with returns thus, you really have to be able to accept both.
#5. New Shield Plan Provider
Singapore’s healthcare cost has been increasing year after year. And one way for you to afford is to have health insurance. In Singapore, we are fortunate that we have the MediShield Life, which is national health insurance.
But, most of us know that MediShield Life benefit and coverage only covers you only up to a certain limit. You can only get treatment from Singapore government hospital.
That is the reason for the existence of an Integrated Shield Plan or Shield Plan for short. It enhances the benefit and coverage of the MediShield Life.
Just this year Raffles Health Insurance had jumped into the bandwagon of shield plan providers. They introduced Raffles Shield Plan.
Therefore as of now, if you have not owned a Shield Plan just yet, you have various options to choose from. There are now 7 shield providers.
- Aviva
- NTUC Income
- AXA
- AIA
- Great Eastern
- Prudential
- Raffles
They are all the same in terms of the fact that they will pay for allowable hospital bills. But different insurers have different types of other benefits thus If you wonder which one suits you, feel free contact us.
#6. Leaving $20,000 behind in CPF Ordinary Account
Yes, you are reading it right. You are now able to leave $20,000 in your CPF Ordinary Account (CPFOA) when purchasing a HDB Flat.
This is definitely something new compared to emptying out your CPFOA. It gives some assurance to new homeowners that they are still able to pay for the first few months of the mortgage when they are not able to work for any reason.
Without a doubt, there will be questions on whether this is a good thing or not. It does help certain people but what you need to know is that not everyone is the same. Thus, before you do decide to leave $20,000, do know what might be the effect and consequences of doing so.
#7. CPF LIFE Escalating Plan
The scheme that pays you money every month from your CPF upon reaching the age of 65 is under the CPF LIFE (Lifelong Income For the Elderly) annuity scheme.
You might want to know under the CPF LIFE scheme, there are actually 3 different plans.
- The Basic Plan
- The Standard Plan
- The Escalating Plan
The Escalating Plan however only started in January of 2018. Thus it is something new.
The beautiful thing about the Escalating Plan is that the payout will increase annually. That is good news as that will at least help to be on par or even getting close to the future cost of living. Inflation is a real thing that is happening as we speak, thus choosing the new Escalating Plan might be a good choice for you.
#8. More Insurers are accepting Pre-Existing Conditions
In order for you to own insurance policy, you have to be fit and healthy. This applies to some insurance policies. The term Pre-Existing Condition is something that is not new. It means an illness or injuries that affected you in the past.
If you do have a Pre-Exiting Condition, there is a possibility that you would not be given coverage from the insurer. Be it you suffered asthma, being involved in an accident that causes you to be disabled or even being obese.
However, in 2018, several insurers have opened their arms to these certain group of people. This is definitely good news and a light at the end of the tunnel.
One insurer now accepts people who have high cholesterol for their health insurance. And another insurer now accepts people who are severely overweight for their critical illness plan.
This opens options for more people and it really gives you no other excuses for you not to get insurance coverage for yourself or for any of your loved ones.
If you know anyone who is in this situation where an insurance company has rejected them before, you might want to let them know about this. This gives people a certain amount of hope and relief.
#9. A year of En Bloc(s)
Every week you might read the news and see that another property has been en bloc. The numbers that are involved are certainly not a 5-digit figure. You might be in aw with the amount of money involved and you wished you were in receiving the end of the transaction.
If you are one of the many people who got their property en bloc, you might be experiencing mixed feelings. The money given to you was a pretty good amount but at the same time, you might emotionally attach to that place as well.
From the buyer/ developer point of view, it is just a start to more business opportunities. Spending money in order to make more money, one would say.
All in all, it shows that people are spending and that is a good sign for the economy. It also shows that our country here does have investment potential that is actually something that is positive.
Without a doubt, the act of En Bloc is something legal. But it is still your choice to whether you want to sell off your property when the door comes knocking.
You can see it as a good “retirement money” or even a chance for you to buy that fancy sports car that you have been eyeing on. Whatever your choice, do fulfill your needs first before your wants.
#10.Changes in HDB Rental Policy
For those who rent out their HDB flat, you will definitely know of the changes that have implemented in 2018.
The maximum number of tenants living in your HDB flat has now been reduced. Previously, if you are renting out a 4-Room flat you can have a maximum of 9 tenants. But now, it has been reduced to only 6.
This might have affected the returns to certain landlords. You would need to increase rent prices and that may potential tenants to find other alternatives. Therefore, your overall income will change due to the changes.
If you were thinking of renting your HDB flat in the near future, this would manage your expectations and expected returns. Well, this move from the authorities is to stop over-crowding of HDB flats and to maintain a conducive living environment.
Another change that will be implemented is that the maximum rental tenure for Non-Malaysian will be extended. Previously it is 1.5 years and now it has been changed to 2 years.
The change apparently makes it more convenient for both landlords and tenants. Most foreign workers have a work permit that lasts for 2 years and that will finally fall in line with the rental tenure.
For your information, the minimum rental tenure does stay the same at 6 months.
A new year, a new financial goal
That are the 10 things that you might have missed in 2018. It is a brief summary of what happened in a year and hope you are well informed now.
It shows that changes are always happening and we have to learn and adapt to them. Not all changes will work in our favor, thus sometimes all we need to do is to change ourselves since that is the only thing that we have control.
You should review your financial goals and make sure you are on track. Better yet, if you had a good year, you can even create a new one.
This is the first article of 2019 and will be publishing more throughout the year. Do leave a comment if you want us to write about something or even give us feedback.
Well, that’s the end of this article. Do share it if you think this is beneficial to your friends and family.
Disclaimer:
I am a financial adviser but I am not your financial adviser. Therefore, what is posted on this website, are my opinions and NOT to be taken as financial advice. Information provided might be relevant at this period of time but may be irrelevant due to alterations to rules, regulations or policies. The information provided is true to the best of my knowledge, but there maybe omissions, errors or mistakes.
