Dependants’ Protection Scheme (DPS) looks expensive after 40

On The Sunday Times, well-known Invest Editor, Lorna Tan, wrote an article on DPS with the title "What you need to know about DPS coverage".

Link here: http://www.straitstimes.com/business/invest/what-you-need-to-know-about-dps-coverage

Similar to the article we wrote previously below (23Feb2017), it also shows that DPS is more expensive:

If DPS is kept throughout your working years from age 25 till 60, the total premiums work out to be $4,180, significantly higher than those for iTerm which would be about $1,717 for a woman and $2,268 for a man.

Providend says that DPS policyholders in good health may wish to review alternative plans as they reach 40 to take advantage of the lower premiums.

There's also a table of comparison:

So now you know. Time to take action.

[Published on 23 February 2017]

What is Dependants’ Protection Scheme (DPS)?
DPS is an opt-out term insurance scheme which is automatically extended to eligible CPF members. It provides:
1) a Sum Assured of: $46,000 + $5,000,
2) a Coverage Term up to 60 years old &
3) coverage for Death, Terminal Illness (TI) or Total Permanent Disability (TPD)

DPS Premium Rates:

Age (Last Birthday)	Yearly Premium
34 years and below	$36
35 – 39 years	$48
40 – 44 years	$84
45 – 49 years	$144
50 – 54 years	$228
55 – 59 years	$260

From 40 to 59 years, the total premium you will need to pay is $3,580
($84x5 + $144x5 + $228x5 + $260x5).

Now, let's do a simple comparison. Go to CompareFirst website and search for similar products as DPS:
Look under "Term Life Products" with the following options:
- Date of Birth: 1 Jan 1977 (for 20yrs calculation)
- Smoker: No
- Premium Type: Annual
- Coverage Term: 20 years
- Sum Assured: $50,000
- Critical Illness Benefit: No
- Sort Results by: Premium (Lowest - Highest)

You will find that AXA Insurance & NTUC Income are among the cheapest for female at $72/year and Great Eastern Life is the cheapest at for male at $91/year (as of 23Feb2017).
Note: Reducing Sum Assured is different from DPS as the sum assured reduces over time.

So for a coverage term of 20 years, you will only need to pay $1,440 & $1,820 for female & male rates respectively, to provide for:
1) a Sum Assured of $50,000,
2) a Coverage Term up to 60 years old &
3) a coverage for Death, Terminal Illness (TI) or Total Permanent Disability (TPD)

The above comparison would result into a total savings of $2,140 (60%) for female and $1,760 (49%) for male, relative to DPS rates!

The only caveat is that you need to utilise Cash instead of CPF monies to purchase the Term Insurance. I would think that so long as $72/year or $6/month does not make significant (if any) impact to your monthly discretionary income, this is a potential form of absolute savings. To add, accumulating your monies with CPF, currently gives you a minimum of 2.5% interest.

From the findings above, DPS does look more expensive after 40 years old.