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23 Apr 2021
Mortgage insurance is one of the most important things to consider when you buy a home. Think of it as a safety net – it ensures that you will not lose your HDB flat due to unpaid loans in the event of death, terminal illness, or permanent disability. The Home Protection Scheme (HPS) is a form of mortgage insurance that does just that!
Some people mistake HPS for fire insurance, when in fact they are two separate things! Check out the table below for a quick comparison between mortgage and fire insurance.
|Home Protection Scheme (HPS)||HDB Fire Insurance Scheme|
|What||Mortgage-reducing insurance that protects CPF members against losing their HDB flat in the event of death, terminal illness, or total permanent disability.||Relieve flat owners of the financial burden of repair work in the unfortunate event of a fire.|
|Who||Compulsory for HDB flat owners who are using their CPF savings to pay their monthly housing loan instalments.Optional for HDB flat owners who have private life insurance or mortgage-reducing insurance that can sufficiently cover the outstanding housing loan.||Compulsory for flat owners with outstanding HDB loans.|
|What it covers||Outstanding housing loan, up to the insured sum.||Cost of reinstating damaged internal structures, fixtures, as well as areas built and provided by HDB. It excludes renovations or improvements made by flat owners, as well as home contents like furniture and personal belongings.|
|Amount to be insured||Total share of cover per household must add up to at least 100%. You are encouraged to be insured according to your share of responsibility in repaying the loan (using your CPF savings and/or cash).||Based on flat type.|
|Duration to be insured||Up to age 65 or until the housing loans are paid up, whichever is earlier.||Minimally, at least until the housing loans are paid up, and has to be renewed every 5 years.|
|Payment of premium||
Automatically deducted from CPF Ordinary Account (OA) – flat owners are only required to pay the premium for 90% of the HPS cover period.
|Direct payment to FWD Singapore Pte Ltd, the current appointed insurer for the HDB Fire Insurance Scheme, via their website or at any AXS kiosks.|
Now the most important question is… how much does the HPS premium cost? The amount will vary based on the following factors:
For a more accurate estimate of what your premium would cost, do make use of the CPF Board’s HPS premium calculator!
The HPS application process differs based on whether you are taking a loan from HDB or a bank. For HDB loan, you can apply for the HPS when you are applying to use your CPF savings to pay the monthly housing instalment on the HDB website.
For bank loan, you must first apply for HPS on the CPF website before applying to withdraw your CPF savings for your monthly housing instalments.
The HDB Fire Insurance has to be renewed every 5 years, and the premium depends on your flat type. From now till 15 August 2024, the premiums are as follows:
Besides that, it is important to note that less CPF contributions are allocated to your OA as you get older, and this may affect your ability to continue paying your monthly home loan instalments with your OA savings.
|Flat Type||5-Year Premium (Including 7% GST)||Sum Insured|
|2-room/ 2-room Flexi||$2.71||$48,700|
|5-room/ S2/ 3-Generation||$7.13||$97,300|
|Studio Apartment (Type A/ B)||$2.71||$48,700|