Maximising CPF: Guide on MediSave, Health Insurance, and Life Insurance
Among the insurance plans available in Singapore, health insurance and life insurance are typically considered essential. Health insurance includes plans like MediShield Life, Integrated Shield Plans (IPs), critical illness coverage, and hospitalisation insurance. Meanwhile, life insurance commonly comprises term and whole life insurance. While MediShield Life and IPs can be partially funded by CPF MediSave, other types of insurance generally require out-of-pocket premiums.
Keep on reading to learn how to make your CPF work hand in hand to complement your insurance coverage.
What is CPF, MediSave, Health Insurance, and Life Insurance? How Do They Work?
What is CPF?
The Central Provident Fund (CPF) is a mandatory social security savings scheme in Singapore funded by contributions from both employee and employer. It plays a critical role in funding healthcare by supporting the MediSave scheme and other health and insurance coverage.
CPF comprises four main components: Ordinary Account (OA), Special Account (SA)*, MediSave, and Retirement Account (RA). As a national savings scheme, you might be curious about how your CPF savings grow. Well, once you commence working as a salaried employee, your CPF contributions will come from both (your own) employee’s contributions and employer’s contribution. Furthermore, CPF contributions will vary depending on your age, with notable adjustments for those aged 55 and above.
*From the 2nd half of January 2025 onwards, CPF-SA will be closed and its funds will be transferred to the CPF-RA, based on the Full Retirement Sum (FRS) or Basic Retirement Sum (BRS) for those aged 55 and above. Thereafter, leftover CPF-SA funds can be transferred to the CPF-OA to continue earning interest.
What is MediSave?
Similarly, MediSave is also a national savings scheme funded by CPF contributions, to help Singaporeans save for future medical expenses. It can be used to pay for hospitalisation and day surgery expenses, along with other outpatient treatments like dialysis, cancer drugs, radiotherapy, and chronic diseases such as diabetes and hypertension.
What is Health Insurance?
Health insurance plans help offset healthcare costs incurred from injuries, illnesses, or disabilities. While all Singaporeans are covered under MediShield Life, a basic government health plan, there are other types of health insurance policies providing coverage beyond the typical medical expenses or hospitalisation.
In general, there are five types of health insurance plans:
| Type of health insurance | Best for | How to pay premiums? |
|---|---|---|
| MediShield Life | To cover large hospital bills and selected costly outpatient treatments
All Singaporeans and PRs are auto-enrolled into this universal and mandatory scheme |
Through CPF MediSave account |
| CareShield Life | For long-term care or severe disability
Provides lifetime monthly payouts to provide long-term care expenses for elderly or severely disabled individuals incapable of performing at least three out of six Activities of Daily Living (ADL) |
Through CPF MediSave account |
| Hospital Cash Insurance | To receive a fixed daily hospital allowance | Paid out-of-pocket
Monthly, quarterly, semi-annually, or annually depending on preference |
| Critical Illness Insurance | To receive a lump sum payment to help cover medical expenses arising from major critical illnesses like cancer | Paid out-of-pocket
Monthly, quarterly, semi-annually, or annually depending on preference |
| Hospital Cash Insurance | To receive a fixed daily hospital allowance | Paid out-of-pocket
Monthly, quarterly, semi-annually, or annually depending on preference |
| Disability Income Insurance | Replaces income when you are disabled or unable to work to maintain current standard of living | Paid out-of-pocket
Monthly, quarterly, semi-annually, or annually depending on preference |
What is Life Insurance?
Life insurance plans protect against financial loss in the event of death or total and permanent disability (TPD). They can be categorised into two types: term insurance and bundled products (e.g. whole life, endowment plans, investment-linked policies). The former provides coverage for a fixed period without any investment involved whereas the latter combines insurance and investments.
But for simplicity’s sake, we’ll only be addressing term and whole life insurance.
Term Insurance
Term insurance provides insurance coverage for a fixed period of time, with one government-funded example being Dependents’ Protection Scheme (more on that below). This is usually useful if you want to be covered until your youngest child completes their education or becomes financially independent.
Here’s a breakdown of term insurance coverage:
| Policy benefit | What it covers |
|---|---|
| Coverage scope | Death, TPD, and some major illnesses
Fixed term protection lasting five to 40 years Sum assured remains same throughout |
| Cash value | N/A |
| Investment risk | N/A |
| Premium payments | Constant premiums throughout coverage period, except when renewed, converted or reinstated (will be revised according to new age)
Relatively lower premiums compared to whole life policies, for the same amount of sum assured |
| Riders | Optional add-ons to enhance policy benefits such as critical illness or personal accident coverage |
Whole Life Insurance
On the other hand, whole life insurance provides life-long protection. They can be categorised into participating and non-participating policies.
Participating policies share in the profits of the insurer company’s participating fund, paid to the insured through bonuses or dividends depending on the policy. These non-guaranteed benefits supplement the sum assured. Typically, they come in the form of:
Conversely, non-participating plans don’t participate in any investments, and instead, offer guaranteed claims benefits and cash values.
| Policy benefit | What it covers |
|---|---|
| Coverage scope | Lifelong protection against death, TPD, and some major illnesses |
| Sum assured | Combined with non-guaranteed bonuses/dividends (if participating policy) |
| Cash value | Builds over time, providing a savings element |
| Investment risk | Only applicable for participating policies |
| Premium payments | Higher than term insurance due to additional cash value and lifelong coverage |
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How to Pay CPF MediSave Contributions?
While the most convenient method to contribute to your MediSave is via GIRO, there are several ways:
| Payment method | Details |
|---|---|
| GIRO | Use my cpf digital services (for participating banks):
Mail (for non-participating banks): |
| PayNow QR code | Either request for instalment plan or contribute to MediSave in full via Manage your MediSave payable form |
| Cash/NETS/CashCard | Make payment using cash, NETS, or CashCard at any SingPost branch |
Using CPF MediSave for Health Insurance
If you need extra coverage, you can use MediShield to pay for approved medical insurance premiums, like MediShield Life or an Integrated Shield Plan. While MediShield Life is a basic government health insurance plan covering large hospital bills and selected costly outpatient treatments, Integrated Shield Plans cover private hospitals and A & B1 ward types in public hospitals. So think of Integrated Shield Plans as a rider, since it builds upon MediShield Life by layering private insurance coverage on top to provide more extensive or premium services.
Besides that, MediSave can also pay premiums of long-term care insurance like CareShield Life*. It provides monthly lifetime payouts upon losing the ability to perform two or more of the six ADLs like eating, bathing, and dressing. All Singaporeans and PRs born in 1980 and later are auto-enrolled in this scheme upon turning 30 years old.
Apart from insurance, MediSave can also be used to pay for hospitalisation expenses, chronic illness management, and preventive care such as vaccinations and health screenings.
*Since 2020, ElderShield has been replaced by CareShield.
Using CPF MediSave for Life Insurance
While CPF funds cannot be utilised for private life insurance plans, it can be used to pay for government-endorsed or approved policies like Dependents’ Protection Scheme (DPS) and Investment-Linked Life Insurance under CPF Investment Scheme (CPF-IS).
DPS is a term insurance plan that auto-enrols CPF members when they make their first CPF contribution (unless they opt out). For new enrollees (aged 21 to 60), the payout is up to $70,000 in the event of death, terminal illness, or TPD. Premiums can be configured to auto-deduct from MediSave.
In contrast, life insurance under CPF-IS refers to investment-linked (term or whole life) insurance plans. As the name suggests, these policies combine insurance coverage with investment opportunities. They can be purchased with CPF-OA savings. However, withdrawals are subject to limits to ensure sufficient CPF savings remain for housing and retirement needs.
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Additionally, IP riders can be opted to further reduce out-of-pocket costs. For instance, some riders allow for co-payment waivers, meaning you don’t have to pay a portion of your hospital bills. While main IPs can be partially paid using MediSave, riders typically need to be paid out-of-pocket.
Frequently Asked Questions
How much are CPF contributions?
- The total CPF contribution is 37%, comprising 17% from your employer and 20% from your salary.
How to withdraw CPF?
- You can apply for CPF withdrawal from 55 years old onwards.
How to top up CPF (e.g. for tax relief)?
- CPF tax relief only applies to cash top-ups. Transferring funds from your own CPF account to your own or family member’s CPF-SA or CPF-RA does not qualify.
The amount of tax relief you’re eligible for is based on the cash top-up amount, capped at $8,000 per year. For example:
- Top-ups < $8,000: Tax relief will match the amount.
- Top-ups > $8,000: Tax relief is capped at $8,000.
What is the maximum amount for CPF Retirement Account (RA)?
- Currently, the Full Retirement Sum (FRS) in the CPF-RA for members turning 55 years old in 2024 is $205,800 — with the current Enhanced Retirement Sum (ERS) being $308,700.
From 2025, the CPF Enhanced Retirement Sum (ERS) in 2025 will be $426,000. If they choose to top up to the raised ERS, members turning 55 years old in 2025 can receive > $3,000 CPF LIFE monthly payouts from age 65 onwards. How to top up MediSave?
- MediSave top-ups are irreversible, and the amounts are capped at the BRS amount. Top-ups can be made through PayNow.
How many times can I withdraw from CPF after 55 years old?
- There is no limit to the number of CPF withdrawals. You can withdraw a portion anytime when you need immediate cash.
How to open a CPF Investment Account?
- To open a CPF Investment Account (CPF-IS), you need to be:
- At least 18 years old
- Must be an undischarged bankrupt and be mentally sound
- Have savings in your CPF-OA (≥ $20,000) and CPF-SA (≥ $40,000) after setting aside funds for investments
After meeting these requirements, you can open your CPF-IS with one of the following agent banks (DBS, OCBC, UOB) with your CPF statement & NRIC.
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Related Articles
Want a deeper dive into what insurance plans are best for you? Check out our other guides down below!
All You Need to Know About Health Insurance
Guide to CareShield Life
Guide to Term Insurance
