What is Singapore Deposit Insurance Corporation (SDIC) and How Much Am I Insured For?
“Protected up to specified limits by SDIC”
You’ve probably come across this line as a fine print at the bottom of a marketing product from financial institutions. But what exactly are you protected for and how much is the limit?
Let’s find out what the Singapore Deposit Insurance Corporation (SDIC) is and the schemes it administers!
TL;DR: What is SDIC and How Much Am I Insured For?
- The Deposit Insurance (DI) Scheme by SDIC guarantees deposits in a bank up to $75,000 per bank per person.
- In the event a bank fails, compensation will be automatic once MAS declares the bank insolvent.
- The Policy Owners’ Protection (PPF) Scheme protects policy owners up to specified caps.
- In the event an insurer fails, policy owners would be compensated by SDIC according to the applicable protection ratios and guaranteed policy liabilities.
- What Is SDIC?
- What Is the Deposit Insurance Scheme?
- What Is Covered Under The Deposit Insurance Scheme?
- What Is the Policy Owners’ Protection Scheme?
- What Is Covered Under the Policy Owners’ Protection Scheme?
- Author’s Note
What Is SDIC?
SDIC stands for Singapore Deposit Insurance Corporation. They administer the Deposit Insurance (DI) Scheme and Policy Owners’ Protection (PPF) Scheme in Singapore.
The SDIC board of directors is accountable to the Minister in charge of the MAS.
Is SDIC part of the government?
Although they are accountable to MAS, SDIC is not a part of the government and is a company limited by guarantee under the Companies Act.
What Is the Deposit Insurance Scheme?
Banks are some of the safest places where you can park your money. Yet things have gone wrong before and even the world’s top banks can fail.
While Singapore’s licensed banks and financial institutions are supervised by the Monetary Authority of Singapore (MAS), MAS does not guarantee the soundness of individual financial institutions.
How then, can we be sure that our core savings are protected if things go south?
Enter the Deposit Insurance Scheme administered by the Singapore Deposit Insurance Corporation (SDIC).
The Deposit Insurance (DI) Scheme provides a basic level of protection to small depositors.
Currently, the DI scheme guarantees deposits in a bank up to S$75,000 per bank per person.
In other words, if you have an account with DBS and DBS fails in some doomsday scenario, MAS will declare DBS insolvent and SDIC will automatically compensate you up to S$75,000.
Singapore requires all full banks and finance companies to be members of the Deposit Insurance Scheme. As such, this covers all banks in Singapore including digital banks.
What Is Covered Under the Deposit Insurance Scheme?
SDIC insures Singapore dollar-denominated deposits placed with a DI Scheme member in any of its branches in Singapore. These include
- A deposit held in a savings account
- A deposit held in a fixed deposit account
- A deposit held in a current account
- Any monies placed under the CPF Investment Scheme
- Any monies placed under the CPF Retirement Sum Scheme
- Any monies placed under the Supplementary Retirement Scheme
- Other products, as prescribed by the Authority
However, it does not insure financial products such as
- Foreign currency deposits
- Structured deposits
- Investment products such as unit trusts, shares and other securities
Moreover, all your insured deposits placed with that member, are aggregated and insured up to S$75,000. So having multiple accounts with a total value of more than S$75,000 in a single bank will still only guarantee up to S$75,000.
The only exception to this is CPF. Monies placed with a DI Scheme member under the CPF Investment Scheme (CPFIS) and CPF Retirement Sum Scheme (CPFRS) are aggregated and separately insured up to S$75,000.
What Is the Policy Owners’ Protection Scheme?
Like the DI scheme, the Policy Owners’ Protection (PPF) Scheme has been set up to protect policy owners in the event of a failure of a life or general insurer which is a PPF Scheme member.
What Is Covered Under the Policy Owners’ Protection Scheme?
Under the scheme, both life and general insurance policies are covered.
Life insurance includes all types of life insurance, endowment policies, annuities, and long-term accident and health (A&H) policies. General insurance includes all compulsory insurance policies under the Motor Vehicles (Third Party Risks and Compensation) Act and Work Injury Compensation Act and short-term accident and health (A&H) policies.
SDIC will compensate policy owners for claims, surrenders of policies, maturity of policies, and ongoing annuity payments which occurred before MAS decides to activate the use of the PPF Fund.
Of course, there are applicable caps which are as follows:
- Individual life and voluntary group life policies (with the exception of annuities): Cap of S$500,000 for the aggregated guaranteed sum assured and S$100,000 for aggregated guaranteed surrender value per life assured per insurer.
- Individual and voluntary group annuities: Cap of S$100,000 for the aggregated commuted value of guaranteed benefits (i.e. annuity payments, death or surrender benefits) per life assured per insurer.
- Non-voluntary group term life policies: Cap of S$100,000 for guaranteed sum assured per policy.
- Non-voluntary group whole life or endowment policies: Cap of S$100,000 for guaranteed sum assured and S$50,000 for guaranteed surrender value per policy.
- Non-voluntary group annuities: Cap of S$100,000 for commuted value of guaranteed benefits per policy.
For general insurance, there are usually no limits in terms of PPF coverage except in the following instances:
- Limits specified under the law for compulsory insurance policies
- S$50,000 for own property damage motor claims, under personal motor insurance policies
- S$300,000 for property damage claims, under personal property (structure and contents) insurance policies
Now that we know about SDIC, the schemes they administer, and what they cover, here is what I would do with that information.
Although Singapore’s financial system has been rock solid, the global financial situation has shown us that even top banks can suffer from bank runs and fail.
Whether it is signing up for insurance or depositing money in the bank, diversifying even your bank monies and insurance policies is not such a bad idea. After all, it is better to be safe than sorry!