Allowing Senior Policyholders to Access Life Insurance Death Benefits Early to Meet Nursing Home, Caregiving and Assisted Living Expenses
Ministry of FinanceSpeakers
Summary
This question concerns whether the Government will work with insurers to enable senior policyholders to access life insurance death benefits early to pay for nursing home, caregiving, and assisted living expenses, as raised by Mr Kwek Hian Chuan Henry. Minister of State Alvin Tan responded that life insurance is underwritten and priced specifically to protect beneficiaries upon death, meaning routine early access would fundamentally alter the policies' nature and pricing. He noted that alternative products already cater to lifetime expenses, including policies providing retirement income, long-term care support upon disability, and products with cash values accessible via policy loans or withdrawals. While accessing cash value provides financial flexibility during a policyholder's lifetime, it can reduce eventual payouts to beneficiaries and attract charges. Minister of State Alvin Tan added that the Monetary Authority of Singapore will continue working with the insurance industry to support product innovation to meet Singaporeans' evolving needs.
Transcript
The following question stood in the name of Mr Kwek Hian Chuan Henry –
22 To ask the Prime Minister and Minister for Finance whether the Government will work with the insurance industry to enable senior policyholders to access part of their life insurance death benefits early to meet nursing home, caregiving and assisted living expenses, with a corresponding reduction in the eventual benefits payable to their beneficiaries.
Mr Lee Hong Chuang (Jurong East-Bukit Batok): Question No 22.
The Minister of State for National Development (Mr Alvin Tan) (for the Prime Minister and Minister for Finance): Speaker, Sir, the primary purpose of life insurance is to provide financial protection for beneficiaries when insured events occur, most commonly the death of the insured person. Insurers underwrite and price these policies on the basis that the death benefit will be paid only when the insured event occurs.
Allowing policyholders to routinely access death benefits earlier would fundamentally change the nature of the insurance coverage and how such policies are priced. There are other insurance products designed to meet expenses during one's lifetime. For example, some insurance policies provide monthly income during retirement and some others provide financial support for long-term care needs upon disability. Some whole life and endowment policies also accumulate cash value over time. Subject to policy terms, policyholders may access the cash value during their lifetime through policy loans or withdrawal. This provides a degree of flexibility for policyholders who need funds during their lifetime, although doing so will reduce the amount ultimately payable to beneficiaries and may be subject to charges.
The insurance industry already offers a range of products to meet different protection, retirement, healthcare and long-term care needs. The Monetary Authority of Singapore will continue to work closely with the insurance industry to support product innovation to meet the evolving needs of Singaporeans.