Singaporean parents can open CDAs with DBS, OCBC, or UOB banks without having to go to the bank itself. They only need to fill an online form and the account will be opened within the form’s completion or 5 working days from birth registration, whichever is later.
Once opened, parents can use the CDA to save for up to 12 years and the government matching program will be valid within this period as long as the cap has not been reached. In addition, babies born from 24 March 2016 onwards will receive the First Step grant, which is $3,000 provided by the government without any savings required from the parents. When the child turns 13, any remaining balance will be automatically transferred to his/her’s Post-Secondary Education Account. If the government matching program’s cap has not been reached at this point, you may continue to obtain it until the child turns 18.
Monies in the CDA can be used to pay for the child’s healthcare and educational expenses at the following institutions: hospitals, clinics, pharmacies, optical shops, child care centres, kindergartens, special education schools, providers of early intervention programs, and providers of assistive technology devices. This is a big benefit for Singaporean parents, as the cost of pre-school education can be rather expensive in Singapore. Furthermore, the inclusion of pharmacies and optical shops means CDA can be used to purchase everyday needs such as supplements, vitamins, and glasses or contact lenses if needed.
Another powerful use of the CDA, which unfortunately so far has not been utilized by a lot of people, is to buy insurance plans. Parents should ideally purchase an insurance policy for their children while they are still at a young age, as premiums would rise sharply with age. In addition, the lack of pre-existing conditions means children are more likely to be awarded a full coverage with no exclusions for certain illnesses. As long as the policy is valid, any future conditions will be covered provided there are no exclusions.
Currently, most parents use the money in Medisave Accounts to purchase insurance policies. However, using the CDA money actually much more sense. This is firstly thanks to the government matching program, which means parents only pay 50% of the insurance’s price tag. Furthermore, CDA only accumulates 2% interest per annum, while Medisave Account earns 5%. Therefore, leaving more money in the Medisave Account actually makes more financial return! This is definitely something you should think about when mulling about insurance policies.
+6594380070