What Is Home Protection Scheme?
The Home Protection Scheme (HPS) in Singapore is a mortgage reducing term assurance (MRTA) policy that protects you and your loved ones from losing your HDB flat in the case of death, terminal illness, or total permanent disability. Home Protection Scheme works like insurance, and members are covered until they reach the age of 65, or until their mortgages are paid off, whichever comes first.
Who Can Apply For The Home Protection Scheme In Singapore?
The Home Protection Scheme is compulsory for CPF members who own a HDB flat and use their CPF Ordinary Account (OA) savings to pay off the monthly housing loan repayments. They also have to be in good health and are required to undergo a medical examination and produce a medical report certifying so.
For HDB homeowners who are paying off their housing loan using cash and not their CPF savings, they can also apply to be covered under the scheme.
The HDB Home Protection Scheme does not cover private residential properties, including condos and executive condominiums (EC).
How Much Is The Home Protection Scheme Premium?
The premiums for the HDB Home Protection Scheme is dependent on these 4 main factors.
- Your age – the older you are, the higher the Home Protection Scheme premium
- Your gender – men generally pay higher premiums than women
- Your outstanding home loan amount – the higher your outstanding loan amount, the higher the premium
- The repayment period for your apartment – the annual premium is only for 90% of your home loan term and the shorter this period, the higher your premium.
To have an estimate of the annual premium, you can use the HPS Premium Calculator on the CPF website.
How Long Is The Coverage?
The HDB Home Protection Scheme coverage for members is until they reach 65 years old or until their mortgages are paid off, whichever first.
If your mortgage is only fully paid off after the age of 65, you can consider getting private insurance coverage once the Home Protection Scheme coverage expires.
Advantages Of The Home Protection Scheme
The Home Protection Scheme is an affordable and flexible way for HDB homeowners to protect their loved ones and their home from financial difficulties in the event of unforeseen circumstances. On top of having peace of mind while being covered by the scheme, here are some of its other advantages.
Protects Home Ownership
One of the main advantages of being covered under the Home Protection Scheme is being protected against losing your flat.
In the unfortunate event of death, terminal illness or total permanent disability, the total sum assured in the Home Protection Scheme will go towards paying off the outstanding housing loan. As such, your loved ones will be at ease because they will not have to worry about paying off your share of the housing loan instalments and risk losing the apartment.
The sum assured will be paid in the event of death, terminal illness, or total permanent disability, which will go towards taking care of the housing loan. Your loved ones can have peace of mind, as they will not have to worry about keeping up with your share of the loan repayments and risk losing the flat.
Affordable Annual Premiums
The Home Protection Scheme was designed to be affordable for all CPF members. For example, for a CPF member who is aged 25 years old with a loan amount of $500,000, the annual Home Protection Scheme premium payable is as low as $245. This spreads out to be just about $20 per month, which is highly affordable as compared to other insurance schemes to protect your home.
To estimate your annual Home Protection Scheme premium for your coverage, you can use the HPS Premium Calculator on the CPF website.
Easy Annual Premium Repayments
For those paying with their CPF savings, the CPF Home Protection Scheme premium is payable in full with their OA savings and will be deducted from their CPF on a yearly basis. This is convenient in ensuring that the coverage is not interrupted and there are no lapses in payment.
For those with insufficient funds in their OA or those who choose to pay off their premiums in cash, they will be notified when payment is due. Payment can be then made via e-Cashier, eNETS, PayNow, AXS/SAM Stations or cash at any Singapore Post Office branch office.
Alternatively, the co-owner of the flat can also authorise the CPF Board to use his/her OA savings to pay your premium shortfall.
Home Protection Scheme for Private Property
The CPF Home Protection Scheme (HPS) in Singapore only covers HDB flats with HDB housing loans. It does not cover private residential properties including condos, ECs or privatised Housing and Urban Development Company (HUDC) flats.
For private property owners, there are other forms of coverage available that can provide similar protection. Two options that private residential property owners can consider are mortgage insurance and term life insurance.
Mortgage insurance is designed to pay off the outstanding mortgage balance in the event of death, terminal illness, or total permanent disability of the homeowner. Mortgage insurance can be purchased from a private insurance company, and the coverage and premiums will depend on the individual’s age, health, and the outstanding mortgage amount. Unlike Home Protection Scheme, mortgage insurance covers both HDB flats and private properties. It can also be transferred to a new property if you decided to sell your home, unlike the Home Protection Scheme that is tied down with the selected property. Mortgage insurance plans also has add-on riders where more coverage for critical illnesses, premium waivers and retrenchment coverage can be added to provide peace of mind to homeowners and their families knowing that the mortgage will be paid off in the event of unexpected circumstances.
Term Life Insurance
Another option that private residential property owners can consider is term life insurance. This type of insurance offers protection for a fixed period of time and provides a lump sum payout to the designated beneficiaries in the event of the policyholder’s death. The payout can be used to pay off any outstanding mortgage balance, as well as cover other expenses such as daily living costs and education expenses for children. While Term Life insurance can cover you beyond the age of 65, its premiums are typically more expensive than the premiums for a mortgage insurance or Home Protection schemes.
Home Protection Scheme vs Mortgage Insurance vs Term Life Insurance
There are both pros and cons to each option, whether it comes to choosing between the HDB home protection scheme, mortgage insurance and term life insurance. For private property owners, they are only limited to the latter two options.
Altogether, it is important for homeowners to evaluate their individual circumstances and needs and consult with a qualified insurance professional to determine the best type and amount of coverage for their situation.
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