Buying a home is one of the most important milestones for most Singaporeans. It also requires a serious financial commitment of up to 25 years. That said, it’s crucial to take necessary precautions to safeguard this asset.
Thankfully, the Singapore government has created a scheme that offers insurance protection for HDB flat owners. The Home Protection Scheme (HPS) was introduced to protect homeowners and their families from losing their HDB flat in the event of death, terminal illness, or total permanent disability before fully paying their mortgage.
Read on to find out how the HDB Home Protection Scheme can benefit you.
What Is This Home Protection Scheme (HPS)? What Is the Coverage?
The Home Protection Scheme (HPS) is mortgage-reducing insurance that protects HDB flat owners. This scheme protects you and/or your family from losing your home in the event of death, terminal illness, or total and permanent disability. If such an unfortunate event happens, you or your family will qualify for a claim which will be the outstanding housing loan.
Say, for example, the individual who’s paying for the mortgage still owes S$100,000 on his home loan. This will be paid in full by the HPS. That said, surviving family members won’t have to worry about losing the HDB flat or having to take over the mortgage.
The HPS only covers HDB flats. This scheme doesn’t cover private properties, executive condominiums, or Privatized Housing And Urban Development Company Flats.
Is HPS the Same As Home Protection Insurance (i.e Fire Insurance)?
In a nutshell, fire or home insurance helps if something happens to your property. The HPS helps if something untoward happens to you.
Home or fire protection insurance gives you a payout for the damage to the structure of your property. HPS, on the other hand, gives you or your family a payout so you don’t have to worry about the outstanding mortgage.
Take a look at the table below:
| Home Protection Scheme (HPS) | Home or Fire Insurance Policy |
| Pays up the remaining mortgage on behalf of the HDB flat owner in the event of death, permanent and total disability, or terminal illness | Pays out pre-defined benefits in the event of loss or damage to property and contents. Some policies may include personal liability against injuries or claims. |
| Applicable to HDB flats only | Applicable to HDB flats, private properties, or any type of residential property |
| Mandatory under certain conditions | Only fire protection for HDB flats is mandatory. Further coverage for home contents is optional. |
It is important to note that home protection insurance is not designed to replace HPS. Instead, the two types of insurance complement each other to provide full coverage.
Is HPS Required? Who Are Eligible?
HPS is mandatory for any HDB flat owner who uses their Central Provident Fund (CPF) savings to pay the monthly housing loan instalments. HDB applies whether you are using an HDB loan or bank loan.
What if I’m an HDB flat owner but I’m not using CPF to pay for my home loan?
You are still eligible for the HPS and can opt-in. You can apply on the CPF website if you want insurance coverage under HPS.
Eligibility:
- You own an HDB flat.
- You are using CPF savings or cash to pay your housing loan
- You’re in good health.
It’s important to note that CPF members with serious pre-existing illnesses are not eligible for HPS. Examples of serious pre-existing conditions include cancer, kidney failure, liver failure or transplant, and diabetes with complications. CPF will consult a panel of doctors to assess each individual case.
If you are not eligible for the HPS, you can get private mortgage insurance instead.
How To Be Exempted From the Home Protection Scheme?
HDB flat owners can opt-out of the HPS. This is available for those who have obtained legal ownership for their HDB flats and the housing loan for the property has been disbursed. On top of that, you need to have any of the following types of insurance policies:
- Whole life insurance
- Term life insurance
- Endowment plan
- Life riders (must be attached to a basic policy)
- Mortgage Reducing Term Assurance (MRTA) / Decreasing Term rider
The policy must cover you in the event of death, terminal illness, and total permanent disability for any unpaid sums on your home loan up to the full term of the loan or until you reach the age of 65.
Additionally, the HPS exemption can only be granted if your private insurance policies are enough to cover the outstanding housing loan of your HDB flat in the event of death, terminal illness, and total permanent disability.
To get exempted from HPS, you need to apply online through the CPF website.
How HPS Premium Is Calculated?
Your HPS premium will be calculated based on:
- The outstanding amount of the housing loan on the HDB flat
- Loan repayment period
- Type of loan – HDB concessionary loan or bank loan
- Age and gender of the applicant
A higher loan amount and/or shorter repayment period can increase your HPS premiums. Additionally, younger applicants and females typically enjoy lower premiums.
You can use this online CPF HPS premium calculator to get an estimate of your premiums.
Benefits and Risks of HPS
Protection Against Losing Your HDB Flat: This is the top benefit of HPS. The sum assured will be used to support you and/or your loved ones with the housing loan repayments in case any untoward events happen, such as death, terminal illness, or total permanent disability.
Affordable Premium: The Government launched this scheme to provide affordable insurance for all CPF members. That said, the annual premiums are very affordable and are one of the lowest in the market.
Ease of Premium Payment: The HPS premium is payable in full with your CPF Ordinary Account savings. It will be automatically deducted from your CPF annually. This ensures that there will be no lapses in your coverage.
What are the risks involved?
There’re not a lot of risks involved in opting in. Although you will be spending CPF monies or cash for the premium, it will ensure that you and your family are covered in the future.
However, similar to other insurance policies, there are exclusions for HPS claims. You or your family members cannot make claims under HPS in the first policy year of the cover if the death or permanent incapacitation is due to:
- Self-inflicted injury
- Suicide
- Committing a criminal offense punishable by death
- Or if the claim became necessary due to an international criminal act
It is also important to keep in mind that you will not be able to make claims under HPS if:
- You were not in good health and have pre-existing illnesses before the commencement of HPS cover
- You provided false information
- The claim arose due to war or participation in a riot
What To Know Before Joining the Scheme
Fully and Truthfully Declare Your Health Condition
To qualify for the Home Protection Scheme, you need to make a health declaration. This means you will be asked to disclose your:
- Past and current illnesses
- Past or planned surgery
- Any physical or mental impairment
The CPF Board consults a panel of doctors to assess each applicant’s case. That said, depending on severity, prognosis, and risk profile, your application may be denied.
Remember, any HPS cover issued based on false or misleading information can be voided at any time. If that’s the case, the premiums paid will not be refunded.
Decide on the Right Share of Cover To Apply For
CPF board requires that the total share of cover per household must add up to 100% of the outstanding home loan amount. That said, your share of cover must be according to your share of responsibility in repaying the mortgage.
For example, if you are paying 70% of the mortgage, your share of the HPS cover must be at least 70%. Your co-owner must cover at least 30%. You and your co-owner can choose to insure for a higher share of cover – up to 100% each. In this case, if something unfortunate happens to either of you, the outstanding mortgage will be fully paid by the CPF Board.
Stay on Top of Your Annual Premium Payments
Your HPS premium is automatically deducted from your CPF OA savings annually. So make sure you have enough funds in your OA to prevent lapses in your coverage.
You will need to reapply to join HPS again and you’ll have to disclose your health condition again for eligibility.
Alternatives to the CPF Home Protection Scheme
As previously mentioned, you can be exempted from HPS. However, you need to have another type of insurance policy. Here are some of the alternatives you can consider:
| Factors | Home Protection Scheme (HPS) | Private Insurance Coverage | Mortgage Reducing Term Assurance (MRTA) |
| Housing Coverage | HDB Flats | HDB Flats and Private Property | All housing types |
| Sum Assured | Outstanding home loan | Outstanding home loan | Outstanding home loan |
| Terms | Until the age of 65 | Can be much later or no maximum age | Flexible terms |
| Payment Method | CPF OA or cash | Cash | Cash |
| Claims Recipient | Directly repay the HDB or bank | Nominated beneficiary | Nominated beneficiary |
| Transferrable | Not transferable | Can be transferred to a new property | Can be transferred to the housing loans of the new property |
Applying for HPS
Using CPF Savings For Housing Installments
- If you have an HDB loan: Apply for HPS at the HDB office or any HDB branch office when you apply to withdraw your CPF OA savings for monthly home installments through HDB.
- If you have a bank loan: Submit an online application to apply for HPS. This must be completed before applying to withdraw your CPF savings for your monthly housing installments.
Not Using CPF Savings For Housing Installments
- Submit an online application to apply for HPS
Managing Your HPS Coverage and Payments
Make Premium Payments
Make sure you have enough funds in your CPF OA savings to pay HPS premiums. You’ll be informed if your OA balance is not enough to pay the premium.
Family members who co-own the HDB flat with you can provide authorization to use their OA savings to pay your HPS premium shortfall.
Managing Your Cover
You must adjust your HPS cover if:
- There are changes in your loan repayment period or loan amount. If you are using your CPF savings to repay the loan – HDB loan or bank loan, you don’t need to adjust your HPS cover as it will be automatically adjusted by CPF.
If you are taking a bank loan or are using cash to repay the loan or change the loan repayment period, submit an online application to adjust your HPS cover.
- There are changes in your share of responsibility in repaying the loan. Make sure that your new share of HPS cover is sufficient to pay your share of the outstanding home loan in the event of a claim.
Closing
HPS is compulsory for any HDB flat owner who uses CPF OA savings to pay for monthly home repayments. Even if HPS is not compulsory for you, it’s good to consider getting an HPS cover. It will give you peace of mind that your housing loan will be taken care of in the event of death, terminal illness, or permanent disability.
Key Takeaways:
- The Home Protection Scheme (HPS) is mortgage-reducing insurance that protects HDB flat owners. This scheme doesn’t cover private properties, executive condominiums, or Privatized Housing And Urban Development Company Flats.
- HPS is not the same as home or fire insurance. A home or fire insurance helps if something happens to your property while HPS helps if something untoward happens to you.
- CPF members with serious pre-existing illnesses are not eligible for HPS.
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