The Government has refuted claims made in a text message being circulated on messaging platforms that the ElderShield and CareShield Life health insurance schemes were introduced to reap profits from Singaporeans.

The text message also suggested that because the risk of severe disability is very low, it is unlikely that policyholders will make a claim.

The Government said on its website that it will not profit from CareShield Life. The premiums collected and returns from investments will stay within the fund so that policyholders can benefit through higher payouts or premium rebates.

By 2020, CareShield Life - a national long-term care insurance scheme - will be compulsory for people aged between 30 and 40. After that, Singaporeans will join automatically at the age of 30. CareShield Life offers lifetime cash payouts for those who are severely disabled. Payouts will start at $600 per month in 2020 and increase over time.

"Today, premiums collected under ElderShield are more than the claims paid out, as most policyholders are relatively young," the website said. "However, these premiums collected do not become government surpluses. Rather, they are meant for future claims - when policyholders become older and more of them make claims for severe disabilities."

It also said that as the population ages, half of Singaporeans who are healthy at the age of 65 could go on to become severely disabled.

From 2013 to last year, the annual claims paid out rose by 12 per cent more than the annual premiums collected, which went up by 3 per cent.

"Coupled with shrinking family sizes, it will be challenging to rely solely on personal and family savings to pay for one's long-term care needs," the website said. "While the expected median duration for severely disabled individuals to remain in disability is around four years, three in 10 severely disabled individuals are expected to remain in disability for 10 years or more."

Government subsidies will make CareShield Life more affordable, and premiums can be fully paid by Medisave. If a person cannot pay the premiums, they will not lose coverage.