HDB FAQ: What is the Home Protection Scheme?

If you own an HDB flat and are paying for your monthly home loan instalments with your CPF (or are intending to), and you want to make sure those loans are continuously paid up in the unfortunate event of death, terminal illness, or permanent disability…

Here’s how CPF’s Home Protection Scheme (HPS) can help you save money on insurance premiums and take care of your outstanding mortgage settlements so your kids won’t have to worry about losing their home or taking over the loan repayments in your absence.

Home Protection Scheme and Mortgage Insurance Options:

What is the Home Protection Scheme?

The Home Protection Scheme (HPS) is a mortgage-reducing insurance that protects HDB flat owners and buyers. Here are 3 benefits you’ll enjoy with the HPS, according to CPF:

• Settle your outstanding housing loan, up to the insured sum, with HDB or the mortgagee directly
• Insurance coverage with one of the lowest premiums on the market
• Pay your annual premiums automatic deduction from your CPF Ordinary Account (OA)

How does it work?

It’s basically a guarantee that you will have ownership of your HDB flat regardless of any changes to your living status. That means, you or your family will qualify for an insurance claim if the flat owner passes away, is diagnosed with a terminal illness, or becomes totally and permanently disabled. The amount that you can claim will be the remaining sum on your home loan.

For example, if the flat owner passes away and there’s an outstanding home loan of $50,000, it will be fully paid for by the HPS.

In the event that a member is insured before 1 March 2001, then your Single Premium (SP) HPS will cover you only up to 55 or 60 years old, depending on when you joined the scheme.

Incidentally, the board will extend your Annual Premium cover when your Single Premium cover has expired with an outstanding loan.

How do I apply for the Home Protection Scheme?

Application for the HPS depends on where you got your home loan in the first place; online forms are also available.

Am I eligible for the Home Protection Scheme?

Since 1981, CPF has made the HPS compulsory for HDB homeowners who use their CPF funds to fulfill their monthly installment repayment, regardless of whether that’s in partial or in full.

If you fit this basic criterion, you are eligible to get the HPS. You may be required to undergo a medical examination to ensure you are in good health. CPF may request a copy of the medical report from your attending doctor when determining your eligibility for the HPS.

Should your CPF OA funds not be enough to cover your premium, then you can complete your payment via the following methods:

• E-cashier or E-nets
• AXS/SAM Stations
• Cash at any Singapore Post branch
• Cheque to CPF Board In addition, if anyone co-owns the flat with you, then you can authorize them to use their CPF OA savings to pay for your remaining balance.

That said, the HPS is not really for those who are able to pay for their flat’s purchase or monthly instalments in cash, though they can are still eligible for the HPS and can opt in.

Take note that the HPS does not cover any private residential properties, such as executive condominiums (ECs), privatised Housing and Urban Development Company (HUDC) flats. If you have an oustanding home loan for a private property, you should consider purchasing a private insurance coverage as it will not be covered by the HPS.

Read more articles about HDB:

• Step-by-step Guide to Buy Resale HDB in 2022
• What Resale HDB Buyers Can Expect from Property Agents
• Look Out for These 9 Things Before Buying A Resale HDB Flat

Is the HPS my only option for mortgage insurance?

No, because there are other policies (or mortgage insurances) that can cover your outstanding home loans just as well. If you already have them, then you can apply to be exempted from it. Examples of other insurance policies are:

• Whole Life
• Term Life
• Endowments
• Life Riders (must be attached to a basic policy)
• Mortgage Reducing Term Assurance (MRTA)/ Decreasing Term Rider

However, if you’re already covered by the HPS, then you’re better off keeping it on board and availing of other independent insurance to add to it instead. Keep in mind though that your HPS may be revoked if your other policies are changed or discontinued.

How much does the HPS cost?

There are 4 main factors that heavily influence how much your premium will be.

1. The outstanding home loan amount on your flat

The higher your loan, the higher the premium.

2. The repayment period for your flat

The shorter the period, the higher the premium. But, you only need to pay your annual premium for 90% of your HPS cover period. For example, if your cover period is 30 years, then you only need to pay for 27 years.

3. Your type of loan, either concessionary rate or market rate

This depends on when you took your loan out. If it was before 1 January 2003, then you might be under the then available HDB Market Interest Rate. Had you taken your loan out any later, then you would be subject to the HDB Concessionary Interest Rate instead.

The HDB Market Interest Rate vs. the HDB Concessionary Interest Rate

The former’s value was taken from the average loan interest rates offered by 3 local banks:

• DBS/POSB
• OCBC
• UOB

On the other hand, the latter is calculated by adding 0.1% more to the current CPF interest rate.

4. Your age and gender

The older you are, the higher the premium. Generally, men also pay higher premiums than women do. Those who want to get a more exact estimate of how much the HPS will cost them can try out this online calculator.

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