Orlando Harmon
If you're considering buying an HDB flat, you may be wondering if mortgage insurance is compulsory. The short answer is: it depends. The Home Protection Scheme (HPS) is a form of mortgage-reducing insurance that is mandatory for eligible buyers and owners of HDB flats who use or plan to use their CPF funds to make monthly loan payments. HPS protects you and your family from losing your flat in the event of death, terminal illness, or total permanent disability, up to the age of 65. However, if you purchase an HDB flat without using your CPF savings (i.e., by using cash), HPS is not compulsory, but you may still choose to opt for it or explore alternatives like private insurance plans.
| Characteristics | Values |
|---|---|
| Compulsory | Yes, for eligible buyers and owners of HDB flats who use or plan to use their CPF funds to make monthly home loan payments. |
| Automatic Enrollment | Yes, for eligible buyers and owners who meet the criteria for compulsory HPS. |
| Opt-Out Option | Yes, if you prefer to be covered by other types of private insurance plans, including whole life insurance, term life insurance, or an endowment plan. |
| Coverage | Protects you and your family from losing your HDB flat in the event of death, terminal illness, or total permanent disability, up to age 65. |
| Cost | One of the lowest premiums on the market, with affordable annual premiums. |
| Payment Method | Annual premiums are deducted automatically from your Ordinary Account (OA). |
| Exemption | Possible if you have life insurance or mortgage-reducing insurance from private insurers that can sufficiently cover the outstanding housing loan. |
| Application Process | For exemption, approach the insurer(s) of your private insurance policy(s) to submit your application. |
| Requirements | Legal ownership of the HDB flat, mortgage loan approval from HDB, and a health declaration are part of the eligibility assessment. |
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What You'll Learn
Home Protection Scheme (HPS)
The Home Protection Scheme (HPS) is a form of mortgage insurance that protects homeowners in Singapore. It is administered by the Central Provident Fund (CPF) Board. HPS is compulsory for eligible buyers and owners of HDB flats who use or plan to use their CPF funds to make monthly home loan payments. They are signed up for the HPS automatically. However, if you buy an HDB flat without using your CPF savings (i.e., by using cash), you do not need to be covered by HPS. But you can still choose to be covered under this scheme.
HPS provides protection coverage to the insured member until 65 years of age or until the housing loans are paid off, whichever is earlier. It protects you and your family from losing your HDB flat if you can’t repay your home loan due to death, terminal illness, or total permanent disability. HPS will pay off the outstanding home loan up to the sum assured and based on the percentage share of the insured. The outstanding mortgage amount gradually decreases when the CPF Board pays your monthly home loan instalments.
To check your HPS cover, you will need to log in to the CPF Home Ownership dashboard with your Singpass details and click on "Protection against losing your home". Once you’ve entered the “Protection against losing your home” section, you’ll be able to access your Home Protection Scheme (HPS) coverage status, current sum assured, the HPS certificate, and the share of your Annual Premium HPS cover.
You can apply for HPS online via the CPF website. You will receive a HPS certificate once your application has been approved and your first HPS premium has been deducted. The HPS certificate will include details such as your percentage of coverage, the insured sum, policy commencement and expiry dates, the address of the flat, and the annual premium rate.
HPS premiums can be paid using funds from your CPF Ordinary Account (OA) and are deducted automatically yearly. For HPS, you only need to pay premiums for 90% of your cover period. This means that if you need to be covered for 25 years, you’ll only need to pay premiums for the first 22 and a half years.
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HPS eligibility and exemption
The Home Protection Scheme (HPS) is a form of mortgage insurance that protects homeowners in Singapore. It is mandatory for eligible buyers and owners of HDB flats who use or plan to use their CPF funds to make monthly home loan payments. However, if you buy an HDB flat without using your CPF savings (i.e., by using cash), HPS becomes optional.
To qualify for HPS coverage in Singapore, you need to meet the following eligibility criteria:
- You must be a Singapore Citizen or a Singapore Permanent Resident.
- You should own an HDB flat or EC unit with an HDB concessionary loan or a bank loan insured under the HPS. Private properties and commercial properties are not eligible for HPS coverage.
- The HPS coverage applies to individuals between 21 and 65. The coverage typically ends at 65 or earlier if the housing loan is fully paid or refinanced.
- You and your co-owner(s) must use CPF funds to repay the monthly housing loan instalment.
If you wish to be exempted from HPS, you can apply for an exemption if you have an existing private insurance policy that meets the necessary criteria. Your insurance policies must be sufficient to cover your outstanding HDB housing loan in the event of death, terminal illness, or total permanent disability. They must be in force up to the full term of the loan or until you turn 65, whichever is earlier. The sum assured by the policy must be sufficient to cover the full housing loan. Additionally, you need to be the legal owner of the property, and the policies must be priced in Singapore dollars.
You can submit an online application for an HPS exemption through the CPF website by accessing your CPF account and navigating to the relevant section. Your insurance provider will verify that everything is in order before submitting the application to CPF, who will then assess your application and notify you of the outcome. Please note that HPS exemptions are subject to approval, and you may receive a full or pro-rated refund of the premiums you have paid.
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HPS alternatives
HPS, or the Home Protection Scheme, is a form of mortgage insurance that is mandatory for eligible buyers and owners of HDB flats who use or plan to use their CPF funds to make monthly home loan payments. However, if you purchase an HDB flat without using your CPF savings, you are not required to be covered by HPS. In this case, you may want to consider some alternatives to HPS, which are outlined below:
Mortgage Reducing Term Assurance (MRTA)
MRTA is a form of mortgage insurance offered by private insurers that protects HDB flat owners and private property owners and their immediate family members. Unlike HPS, MRTA is tied to the policyholder, not the property, so it continues to cover you if you sell your property and buy a new one. MRTA policies are designed to cover the outstanding loan amount on your home loan, which will decrease over time. Examples of MRTA policies include Income's Mortgage Term policy and Manulife's ManuProtect Decreasing.
Term Life Insurance
Term life insurance is another alternative to HPS that can provide coverage in the event of death, terminal illness, or total permanent disability. The amount covered by these policies does not reduce over time, and premiums can be comparable to those of HPS.
Whole Life Insurance
Whole life insurance is a type of insurance policy that provides coverage for the insured's entire life, rather than for a specific term. These policies can provide coverage in the event of death, terminal illness, or total permanent disability.
Endowment Policy
An endowment policy is a type of life insurance that provides coverage for a specific period of time, usually until the insured reaches a certain age. These policies can provide financial protection in the event of death, terminal illness, or total permanent disability.
It is important to carefully consider the pros and cons of each alternative to HPS and ensure that you and your loved ones are sufficiently protected.
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HDB Fire Insurance
The Home Protection Scheme (HPS) is another form of insurance available to HDB flat owners. HPS is a mortgage-reducing insurance that safeguards homeowners and their families from financial loss if they are unable to repay their home loan due to death, terminal illness, or total permanent disability, up to the age of 65. HPS is mandatory for eligible buyers and owners of HDB flats who use or plan to use their CPF funds for monthly loan payments, and they are automatically enrolled in the scheme. However, if an HDB flat is purchased without utilizing CPF savings, HPS is not required, although it can still be voluntarily obtained.
While HDB Fire Insurance focuses on fire-related incidents, HPS provides a broader safety net against financial distress due to unfortunate life events. Both types of insurance offer distinct benefits that cater to different needs. It is essential for HDB flat owners to carefully consider their specific requirements and assess the value of each insurance type accordingly.
Additionally, it is worth noting that there are alternative options to HPS, such as the Mortgage Reducing Term Assurance (MRTA) offered by private insurers. MRTA plans are tied to the policyholder rather than the property, allowing for continued coverage even when purchasing a new home. On the other hand, HPS requires a new plan for each new property. When making decisions about mortgage insurance, it is advisable to research and compare the features and conditions of different plans to determine the most suitable option for your circumstances.
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Home contents insurance
For HDB flat owners in Singapore, the compulsory insurance schemes are the Home Protection Scheme (HPS) and the HDB Fire Insurance Scheme.
The HPS is a mortgage-reducing insurance that protects you and your family from losing your flat in the event of death, terminal illness, or total permanent disability. It is compulsory if you are using your CPF savings to pay for your HDB flat's monthly loan instalments. The HPS will cover you until you turn 65 or until your housing loan is paid off, whichever comes first.
The HDB Fire Insurance Scheme, on the other hand, covers the cost of reinstating damaged internal structures, fixtures, and areas built and provided by HDB in the event of a fire. It is compulsory for flat owners with an outstanding HDB loan and must be renewed every five years for as long as the loan is not fully paid.
Now, while these compulsory insurance schemes provide financial security and peace of mind, they do not cover the contents of your home, such as furniture, renovations, and personal belongings. This is where home contents insurance comes in.
When considering home contents insurance, it is essential to research different insurers and policies to find one that suits your budget and specific needs. The General Insurance Association of Singapore (GIA) website provides a directory of general insurers to help you get started.
By purchasing home contents insurance, you can rest assured that your possessions are protected, giving you and your loved ones enhanced peace of mind.
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Frequently asked questions
It depends. If you are using your CPF savings to pay for your HDB flat's monthly instalments, then the Home Protection Scheme (HPS) is compulsory. However, if you are not using your CPF savings, you do not need to be covered under HPS, but you can choose to be.
The Home Protection Scheme is a form of mortgage-reducing insurance that protects you and your family from losing your HDB flat if you can't repay your home loan due to death, terminal illness, or total permanent disability.
HPS will settle the outstanding housing loan, up to the insured sum, with HDB or the mortgagee directly. The insured sum covers your outstanding housing loan, which decreases over time as your home loan is paid off.
Before you can be enrolled in HPS, you must obtain legal ownership of your HDB flat and have your mortgage loan approval from HDB. You will also need to make a health declaration as part of the eligibility assessment. Once your HPS application has been approved and your first premium deducted, you will receive a certificate with details such as your percentage of coverage, the insured sum, and the address of your flat.
If you are not eligible for or do not want to enrol in HPS, you can consider other types of private insurance plans such as whole life insurance, term life insurance, or an endowment plan. You can also consider Mortgage Reducing Term Assurance (MRTA) from private insurers, which protects HDB flat owners and their families in a similar way to HPS.
