Disability Income & Long-Term Care

Disability Income Insurance (DII) protects a person's earning capacity: it replaces a portion of lost income when the insured cannot work because of an accident or illness. It is also called Permanent Health Insurance because the insurer cannot cancel the policy no matter how many times a claim is made — it is guaranteed renewable and non-cancellable (though the insurer may re-rate the premium if the insured moves to a higher-risk occupation). The policy keeps paying a monthly benefit until the insured returns to work, dies, the benefit period ends, or the policy ends — whichever comes first. It can be bought stand-alone or as a rider to a basic life plan.

Do not confuse it with the Total and Permanent Disability (TPD) benefit: TPD is a lump sum that accelerates the death benefit of a life policy for permanent losses (e.g. loss of limbs/eyesight), whereas DII pays a monthly income for a reduced/limited capacity to do one's own occupation. TPD has no escalation, no partial-disability benefit and no chosen deferred period (though a ~6-month waiting period usually proves permanence), and it is available even to non-earners (children, housewives) because it is bundled with the life policy's death benefit.

The monthly benefit cannot equal 100% of income. Insurers typically cap cover at up to 75% of the insured's average income over the 12 months immediately before the disability, and a self-employed person may be granted a lower benefit. The point of replacing only part of the income is to leave the insured financially worse off than when working, preserving the incentive to return to work. A limitation of disability benefit clause reinforces this: the DII benefit plus other income sources (other disability policies, Work Injury Compensation, continuing salary — but not TPD under a life policy) must never exceed the insured's pre-disability earnings.

To be eligible to claim, the insured must: keep the policy in force; be employed (or in-between jobs) when disabled; still be disabled after the deferred/elimination period; meet the policy's total- or partial-disability definition; not have passed the expiry age; not have resided outside Singapore beyond a set period (usually ~6 months); and not have other income which, totalled with the benefit, exceeds what is due. Disability must be certified by a (not the insured or a close relative), and the benefit is paid whether or not the insured is hospitalised.