Buying a home is one of the biggest milestones in life, but have you ever wondered what would happen to your family if something unexpected happened to you?
Losing a home due to unpaid loans can be devastating, but that’s precisely what the Home Protection Scheme (HPS) was designed to prevent.
In this post, you’ll learn:
- What the Home Protection Scheme is and how it works
- Who needs HPS and what it covers (and doesn’t cover)
- The alternatives available, especially for private homeowners
Whether you’re new to this or want to explore your options, keep reading – you might discover just how crucial HPS is for your family’s future!
What is the Home Protection Scheme (HPS)?
The Home Protection Scheme (HPS) is a mortgage-reducing insurance administered by Singapore’s Central Provident Fund (CPF) Board.
It’s specifically designed to protect you, as a homeowner, and your loved ones from the risk of losing your Housing and Development Board (HDB) flat if the unexpected happens – be it death, terminal illness, or total permanent disability.
In essence, HPS ensures that your outstanding housing loan is paid off in full, up to the insured sum, should any of these events occur.
What does HPS cover?
The Home Protection Scheme (HPS) provides critical coverage to ensure your loved ones don’t lose their home due to unforeseen circumstances.
It’s designed to safeguard your family by covering the unpaid housing loan amount tied to your Housing and Development Board (HDB) flat, based on your insured share of the property.
For example, if you co-own the flat with your spouse and your HPS share is 50%, it will cover your half of the loan.
HPS activates if the insured passes away, is diagnosed with a terminal illness with less than 12 months to live, or suffers total permanent disability that prevents them from working.
The coverage lasts until the housing loan is completely paid or until the insured turns 65, whichever comes first.
HPS isn’t any of these…
Fire insurance
Fire insurance is a separate policy that covers damage to your flat’s physical structure caused by fire, floods, or other hazards.
For HDB flats, fire insurance is typically mandatory and must be purchased through HDB’s appointed insurer.
However, fire insurance doesn’t protect your family from losing the flat if you’re unable to repay your mortgage – this is where HPS comes in.
Home insurance
Home insurance provides coverage for the contents of your home, such as furniture, appliances, or personal belongings.
It also covers losses from theft, accidents, or natural disasters.
While home insurance ensures your belongings are safeguarded, it doesn’t handle outstanding housing loans like HPS.
Is HPS compulsory?
Yes, the Home Protection Scheme (HPS) is mandatory for HDB homeowners using their CPF savings to pay for their monthly housing loan instalments.
If you’re paying your housing loan in cash, HPS isn’t compulsory, but you can still opt-in for added protection.
Many cash-paying homeowners choose to do so because of the affordability and peace of mind it offers.
However, if you’re a private property owner or own a non-HDB property, you’re not eligible for HPS.
Instead, you’ll need to explore private mortgage insurance options tailored to your needs.
I’ll dive deeper into insurance options for private property owners later in this article.
How much does the Home Protection Scheme (HPS) premium cost?
The cost of premiums under the Home Protection Scheme (HPS) isn’t a one-size-fits-all figure.
It’s tailored to your circumstances and varies based on several key factors:
- Outstanding housing loan amount: The more extensive your remaining loan balance, the higher your premium will be, as the insurance covers the unpaid portion of your loan.
- Loan repayment period: A longer loan tenure typically increases premiums since the coverage duration is extended.
- Type of loan: Whether you’re on an HDB concessionary loan or a bank loan can influence your premiums. For instance, bank loans may lead to higher premiums due to their interest rate volatility compared to HDB’s fixed rates.
- Age and gender: Premiums tend to increase with age, as older applicants are considered higher risk. Gender can also be a factor, with premiums often slightly differing between males and females.
- Share of coverage: If you’re sharing the property with a co-owner, the premium will depend on your insured share of the loan. For example, if you cover 50% of the loan, your premium is calculated based on that share.
To get a precise estimate of your HPS premium, you can use the CPF Board’s HPS Premium Calculator.
When does the HPS start?
Your Home Protection Scheme (HPS) coverage officially begins once you fulfil several key requirements.
First, you must be the legal owner of your HDB flat. This is a fundamental criterion as the policy is directly linked to your flat.
Next, you need to have completed your housing loan application.
Another critical requirement is submitting and having your health declaration approved. This involves providing detailed information about your current and past health conditions. Once your declaration is reviewed and accepted by CPF, you are deemed eligible for HPS.
Finally, your HPS coverage only kicks in after you have paid your first premium. The payment is typically deducted seamlessly from your CPF Ordinary Account, ensuring no delays in activating your coverage.
Are there any exemptions for the HPS?
Yes, you can be exempted from the Home Protection Scheme (HPS) if you already have sufficient insurance coverage through existing policies.
These policies must provide the same level of protection as HPS and cover your outstanding housing loan in the event of death, terminal illness, or total permanent disability.
The types of eligible insurance policies include:
- Term life insurance: A policy that offers coverage for a fixed period, ensuring your housing loan is paid off if something happens during the term.
- Whole life insurance: A policy that provides lifetime coverage, combining insurance with a savings or investment component.
- Endowment plans: These policies include a savings element and insurance protection, as long as the insured sum covers the outstanding housing loan.
- Life riders: Riders attached to a basic insurance policy can qualify if they offer sufficient coverage for your housing loan.
- Mortgage-reducing term insurance/Decreasing term riders: These are policies specifically designed to cover reducing loan balances, similar to HPS.
For a detailed guide on the exemption process, visit the CPF Board’s page here.
How do I check my Home Protection Scheme (HPS) coverage?
Here’s how you can check your HPS status in just 3 easy steps:
- Log in to the CPF website using your Singpass credentials. This ensures secure access to your account information.
- Once logged in, go to the “Protection against losing your home” section on your CPF dashboard. Here, you’ll find details about your HPS coverage, such as the current sum assured, policy term, premium amounts, and your HPS certificate.
- If you don’t see any HPS coverage listed, it means you’re not currently insured under the scheme. In that case, you can apply for HPS through the CPF portal to ensure your family is financially protected in case of unforeseen events.
How do I make a claim under HPS?
To make a claim under the HPS, visit this page.
Why you need the Home Protection Scheme
Protects home ownership
Life is unpredictable, and HPS ensures your family can keep their home even if the unexpected happens.
Whether it’s death, terminal illness, or total permanent disability, HPS pays off the outstanding housing loan for your HDB flat.
This means your loved ones won’t face the burden of repaying the mortgage, allowing them to focus on what truly matters during difficult times.
Affordable annual premiums
One of the standout features of HPS is its cost-effectiveness.
The premiums are competitively priced and tailored to your specific needs, considering factors like your age, loan amount, and coverage period.
Adjustable coverage
HPS offers the flexibility to adjust your coverage based on your circumstances.
Whether it’s changes in your loan repayment amount, refinancing, or co-ownership adjustments, HPS ensures you’re always adequately covered without paying more than you need.
Payable via your CPF OA
One of the most convenient aspects of the Home Protection Scheme (HPS) is that premiums are automatically deducted from your CPF Ordinary Account (OA).
This eliminates the hassle of making manual payments and ensures that your coverage remains active without impacting your cash flow.
For most homeowners, using CPF savings for HPS premiums means greater financial flexibility.
You won’t need to set aside additional funds from your monthly budget, making HPS a seamless and stress-free part of your financial planning.
Payable via your co-owner’s CPF OA
If your CPF Ordinary Account (OA) balance isn’t sufficient to cover the Home Protection Scheme (HPS) premiums, you can use your co-owner’s CPF OA to make up the shortfall.
This is especially helpful for joint flat owners, such as spouses or family members, as it ensures uninterrupted coverage without needing cash payments.
Your co-owner needs to authorise using their CPF OA funds for your HPS premiums, making it a collaborative and practical way to share the financial responsibility of protecting your home.
Only 90% of the HPS cover period is payable
Another great feature of the Home Protection Scheme (HPS) is that you don’t have to pay premiums for the entire duration of your coverage.
Instead, you’re only required to pay for 90% of the coverage period.
For example, if your HPS cover period is 30 years, you’ll only need to pay premiums for 27 years.
This built-in benefit makes HPS even more cost-effective, ensuring long-term protection for your home while minimising your financial outlay.
Disadvantages of HPS
Only for HDB
HPS is exclusively available to homeowners with HDB flats.
If you own private property, such as a condominium or landed home, you won’t be eligible for HPS.
Private property owners must explore alternative options, such as a term plan, to secure their housing loan in case of unexpected events.
More expensive if you take a bank loan instead of an HDB loan
If you’ve taken a bank loan instead of an HDB concessionary loan, you’ll likely face higher HPS premiums.
This is because bank loans are subject to interest rate fluctuations, increasing insurers’ risk.
While HPS remains affordable, it’s something to remember when deciding between loan options.
Not transferable if you buy a new property
HPS coverage is tied to your current HDB flat and the corresponding housing loan.
If you sell your flat and purchase a new property, your HPS coverage doesn’t transfer.
You’ll need to reapply for HPS for the new home.
This can be inconvenient, especially if your health or financial situation has changed, potentially affecting your eligibility or premium costs.
Does not cover critical illnesses
While HPS offers coverage for death, terminal illness, and total permanent disability, it does not include critical illnesses such as cancer, heart attacks, or strokes.
If you want protection against these conditions, you must purchase additional critical illness insurance.
This limitation means HPS may not provide the comprehensive coverage some homeowners require, making supplementary insurance a consideration.
Alternatives to the Home Protection Scheme (HPS)
If the Home Protection Scheme (HPS) doesn’t fully meet your needs, there are alternative insurance options to consider.
One of the most popular and versatile choices is a term insurance plan.
Term plans are an excellent alternative for mortgage protection because unlike HPS, they aren’t linked to a specific property.
If you decide to upgrade to a private property or purchase another home, your term plan is portable.
This portability provides greater flexibility for homeowners planning for future moves.
Secondly, term plans often come with the option to include critical illness coverage.
This means that beyond protecting your mortgage, you’re also covered for major health events like cancer, strokes, or heart attacks.
With a term plan, you can opt for higher coverage amounts that protect your mortgage and cover other financial obligations.
For many, term plans are the cheapest alternative to HPS, particularly for younger homeowners with longer repayment periods.
The premiums are generally lower (amongst alternatives) while offering flexibility in coverage and benefits, making it an attractive choice for those seeking cost-effective protection.
Home Protection Scheme for private properties
Private mortgage insurance
Private mortgage insurance provides coverage for your outstanding home loan in the event of death, terminal illness, or total permanent disability, much like HPS.
Unlike HPS, private mortgage insurance is not tied to a specific property.
This means you can transfer your policy if you upgrade or move to a new property.
Whether buying a larger home, switching to another private property, or downsizing, your private mortgage insurance remains valid, making it a more versatile option for long-term property owners.
Term life insurance
Term life insurance is a flexible and cost-effective alternative for private properties.
Its portability, critical illness coverage, and broader financial safety net make it a versatile choice for homeowners seeking reliable protection.
How do I apply for exemptions from HPS?
- Visit the CPF e-Services portal.
- Log in using your Singpass credentials for secure access.
- On the right panel of the dashboard, click on “My Requests.”
- Scroll down to the “Home Protection Scheme (HPS)” section.
- Select “Apply to be exempted from HPS.”
- Lastly, submit your application.
Once submitted, CPF will review your application. Approval is subject to meeting all exemption requirements.
If CPF receives your exemption application within 1 month of the start of your HPS cover, you’ll receive a full refund of your premiums into your CPF Ordinary Account (OA).
However, if the application is submitted later, you’ll get a pro-rated refund based on the coverage period.
Frequently asked questions
Should I get HPS or a term plan?
Whether you should get the Home Protection Scheme (HPS) or a term plan depends on your needs and circumstances.
HPS is specifically designed for HDB homeowners using CPF savings to pay their housing loans.
It ensures your loan is paid off in the event of death, terminal illness, or total permanent disability.
A term plan, however, offers more flexibility.
It’s portable if you upgrade to a private property, can include critical illness coverage, and often provides higher payouts for other financial needs.
Can I adjust my HPS coverage?
Yes, you can adjust your Home Protection Scheme (HPS) coverage.
HPS is flexible, allowing you to make changes to match your current housing loan and personal circumstances.
For instance, if you refinance your loan, sell your flat, or change your share of the loan repayment with a co-owner, you can update your HPS coverage accordingly.
Can I cancel my HPS coverage?
Yes, you can cancel your Home Protection Scheme (HPS) coverage, but certain conditions must be met.
If you wish to terminate your HPS, the total coverage (of your alternative coverage) for your property must still be at least 100% of the outstanding loan amount.
This means any co-owner(s) of your flat must have sufficient coverage to compensate for the shortfall.
To cancel your coverage, log in to the CPF portal using your Singpass and submit a request to terminate your HPS.
What happens if I miss an HPS premium payment?
If you miss a Home Protection Scheme (HPS) premium payment, your coverage may lapse, leaving your home unprotected.
However, CPF usually allows a grace period for premium deductions from your Ordinary Account (OA).
If there aren’t enough funds in your OA, you can use your co-owner’s CPF OA or make a cash payment to maintain your coverage.
To avoid losing protection, monitor your CPF balance and ensure sufficient funds are available.
If your coverage lapses, you may need to reapply, which could involve a new health declaration and updated premiums.
Conclusion
The Home Protection Scheme (HPS) is an essential safety net for HDB homeowners, ensuring your family’s home is secure in the face of life’s uncertainties.
We’ve covered what HPS is, what it protects, and why it’s important, as well as its limitations, costs, and alternatives like term life insurance or private mortgage insurance for those with private properties.
Whether you’re looking to apply for HPS, claim under the scheme, or even seek an exemption, the process is straightforward with the correct information.
Still feeling a little lost about what’s best for you?
Don’t worry – you’re not alone.
If you’re unsure about HPS or exploring alternatives, you can talk to one of our trusted financial advisor partners for free.
They’ll help you navigate your options and find a solution for your unique situation.
After all, protecting your home is one of the most important steps in securing your family’s future.
