SAF Group Insurance Plan (A detailed analysis)

Last updated on April 29th, 2018 at 11:28 pm

In July 2016, the Ministry of Defence (MINDEF) and the Ministry of Home Affairs (MHA) jointly created a new and Group insurance called the MINDEF/MHA Group Insurance which replaces the current SAF Group Term Insurance. The insurer remains as AVIVA Ltd. For simplicity of this article, I will still refer it as SAF Group insurance plan.

With this new grouping (and perhaps some backend negotiation), the insurance premium rates have been further lowered. Many forumers believe it to be one of the most cost-effective insurance you can purchase in the market. I have done a throughout analysis on the plan for you to consider covering yourself and family members with this group plan.

Term Life premium is indeed cheap but only up to age65

At $4.10/month for $100,000, it’s really hard to beat. However, consider cancelling the plan your age66 as premium jumps up by 20x.

In addition, $250,000 worth of sum assured can be bought without need to provide evidence of insurability. I personally bought a $100,000 sum assured for myself and in the event I am unwell, I will likely exercise increasing the coverage amount to $250,000. Do note that no death benefit is payable under if it is caused by any pre-existing condition unless the Insured Person has already been insured continuously for 12 months under this policy. IE, this is an exclusion clause for death due to pre-existing conditions within 12months of policy.

 

Critical illness (CI) coverage is capped at $350,000 only
A frequently asked question is “How much sum assured should I have for Critical illness?”
I would suggest that the sum assured must be able to cover your liabilities and long term expenses. Assuming you have a car loan of $100,000 and have $2,000/mth expenses to cover over 25 years, you should at least insure CI of $700,000 sum assured. Do note that this simple calculation has not factored in inflation and other assets you may have.
With the maximum amount capped for CI coverage at $350,000, you should consider the Living Care rider as a supplement to your own personal CI coverage.

 

Critical illness (CI) wordings for “exclusion” seem to be different from a personal plan CI

I have some further concerns. In the “Living Care rider” policy wordings for exclusions:

“No benefit shall be payable under this policy in respect of any CI DIRECTLY OR INDIRECTLY, WHOLLY OR PARTLY CASUED by or arising from or contributed to by ANY of the following:-

ANY condition or illness which is existing (whether or not the insured person is aware of the same) or the cause or the symptoms of which are existing or are evident or ANY condition or illness which the insured person is suffering….”

I’ve checked against those from my personal term plans which have more stringent underwriting. The policy wordings for exclusions only state

“pre-existing conditions that is not communicated to us (unless the condition has been declared and accepted by us)”

 

How many have claimed for SAF CI coverage?

Will the policy wordings prevent claims when we need it in future?

Even if it is as claimable as a personal policy, will the loose underwriting result in excessive claims down the years? Premium rates are non-guaranteed and with some claims from policy holders who were not healthy yet gotten coverage, the insurer AVIVA can easily raise premium rates for the whole group to compensate.

 

 

Critical illness (CI) coverage by the Living Care rider is likely expensive

As shown in the table below, the premiums are on an escalating scale. It almost doubles at each age band from ages 31-35 onwards. I pulled up MyMultipay CI plan which is also issued by AVIVA as a personal CI plan for comparison. Premiums are at $94.60/mth for male age 31 covering $300,000 for Critical illness. Firstly, it is cheaper on a average premium basis. Secondly, it offers a much more comprehensive coverage than the Living Care rider with payouts for early critical illness and cancer relapses.

You may read our analysis on AVIVA MyMulitpay CI plan here.

More importantly policies are underwritten individually and I feel it gives greater certainty in premium stability.

  • Do note that even for personal CI plan, premiums can be level but non-guaranteed.

 

Group personal accident (PA) coverage is cheap

 

If you are on the roads frequently, I strongly suggest buying personal accident coverage. The SAF Group PA plan covers for accidental death, TPD due to accident and Total&permanent dismemberment due to accident. Personal PA plans are more slightly expensive in comparison.

If you are active in sports, then you may consider buying a personal PA plan as it is more holistic in coverage. They would cover for reimbursements for medical treatment/TCM/scans/MC due to accidental injuries.

 

Last words

You may only enrol yourself into the SAF Group TERM LIFE/LIVING CARE/PA plans only if you haven’t MR. If you are still considering whether to buy and going to MR soon, I suggest you quickly purchase the minimal $100,000 sum assured (really doesn’t cost much) and look for financial planning advice.

 

Josh Tan

As a dad now, I have a new found perspective on financial matters concerning parents. I share many of the concerns that you have and as I search for answers myself, I'll share them through my articles. Being keen on investing and personal finance matters, I started a journey in the financial planning industry and have been blessed to share what I am passionate about for the last 10 years.