HDB Home Protection Scheme Guide: Annual Premiums, Rebates, Exemptions & More

home protection scheme hps

Those buying their HDB flat may vaguely remember mention of the Home Protection Scheme (HPS) — in short, it’s a mortgage-reducing insurance that protects Central Provident Fund (CPF) members and their families from losing their HDB flat in the event of death, terminal illness or total permanent disability.​

Now, I say “vaguely remember”, because there’s just so much paperwork involved when getting your own HDB flat, that the Home Protection Scheme just becomes another so-called compulsory form to fill, so that you’ll be closer to your goal of getting the keys to your new home.

 

What is the HDB Home Protection Scheme (HPS)?

The HDB Home Protection Scheme is a mortgage-reducing insurance. This means that the sum assured is proportionate to the remaining amount payable for our home loan — as you pay down your home loan, the sum assured for HPS reduces accordingly.

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In the unfortunate event that a co-owner contracts a terminal illness, has total permanent disability or passes away, HPS will pay off the outstanding home loan, up to the sum assured, based on the percentage share of cover of the insured.

Like any insurance plan, there is an annual premium payable that can be paid for with your CPF funds. A health declaration is also mandatory, and some may need to undergo a medical examination.

According to the CPF website, you have to be insured under HPS if you are using your CPF savings to pay for your monthly home loan instalments on your HDB flat. However, one can apply to be exempted if they already have insurance policies that provide similar coverage. More on that below.

HDB Home Protection Scheme (HPS) eligibility

To qualify for HPS coverage, you will need to satisfy the following:

  • You are the legal owner of the flat
  • You have completed the loan application with HDB or the approved mortgagee and are now legally responsible for the loan
  • You have made your health declaration which is accepted for HPS coverage
  • You have paid the first HPS premium
  • You are between the ages of 21 and 65 (inclusive)

Note: You can’t use HPS for private residential properties (i.e. executive condominiums or ECs) or privatised Housing and Urban Development Company (HUDC) flats.

Shopping for a new home? Browse the top HDB resale flats for sale on PropertyGuru

 

How much is the HDB Home Protection Scheme (HPS)?

The amount of annual premiums paid for the Home Protection Scheme varies with:

  1. Your home loan amount
  2. Your home loan tenure
  3. The percentage of coverage
  4. Loan interest type (HDB concessionary loan or market rate)
  5. Age and gender

For point 3, if you and your co-owner decide to split the mortgage payments by 80% and 20% respectively, you may accordingly opt to get HPS coverage for at least your individual share (i.e. 80% and 20%) of the mortgage amount. The default position is 100% coverage.

The good news: You’ll only need to pay the annual premium for 90% of your HPS cover period. Find out your annual premium via CPF’s Home Protection Scheme (HPS) Premium Calculator.

For example, a 30-year-old female with a HDB concessionary loan amount of $300,000 with a loan tenure of 25 years would be looking to pay $180 per year for 22 years for 100% coverage. As mentioned above, although the sum assured decreases as she pays off her home loan, her HPS annual premium doesn’t change.

Related article: Should You Use CPF to Pay Off Your Home Loan?

You won’t need to use cash unless there are insufficient funds in your OA. The HPS annual premium is automatically deducted from your CPF Ordinary Account (OA), before your monthly mortgage is deducted, so that the HPS remains in force before you use CPF to service your HDB loan.

Just be mindful — if your HPS lapses (you can submit a deferment request), you will need to reapply for HPS and be subjected to another health eligibility check.

Home Protection Scheme rebates

While the annual premium of our Home Protection Scheme is yet another added cost to our home-owning journey, we still can get relief in the form of Home Protection Scheme rebates.

These rebates were recently paid out in January 2020, to the tune of a total of $640 million, disbursed to some 760,000 CPF members. According to the CPF Board, about half of those eligible for the rebates received at least $500, which was credited to their CPF OA.

The previous HPS rebate exercise was in November 2015.

 

What does the HDB Home Protection Scheme (HPS) cover?

If you’re insured under the Home Protection Scheme and don’t miss your annual premium payments, you will be covered up till 65 years old or until your housing loan is paid up — whichever is earlier.

The mortgagee/insured person will be covered for:

  • Terminal illness
  • Total permanent disability
  • Death

There are also a few criteria before the claim benefits can be received:

  • For terminal illness — must be certified by an accredited doctor; terminal illness typically refers to an illness that is likely to result in the death of the insured person within 12 months
  • For total permanent disability — must be certified by an accredited doctor; the insured is unable to take part in any employment permanently or has total permanent loss of physical function of a) both eyes, b) two limbs, or c) one eye and one limb.

However, the HPS doesn’t cover critical illness (i.e. cancer), which could also greatly impact one’s ability to pay off their housing loan. Just so you know, one in every four to five people in Singapore may develop cancer in their lifetime. Another worrying statistic is that Singaporeans lack 80% of their critical illness protection needs.

Other claim exclusions include:

  • Self-inflicted injury or suicide,
  • Criminal offence punishable by death, or
  • Claim arose out of the insured’s own intentional criminal act.

These events are not payable if they occur within the first policy year of the cover.

HPS benefits are also not payable if:

  • The insured was not in good health before the commencement of HPS cover,
  • The insured provided false or misleading information, or
  • The claim arose from wars or any warlike operations or participation in any riot.

Do note that your HPS will also be affected if you:

  1. Sell your HDB flat
  2. Redeem your home loan
  3. Buy a new HDB flat

In the market, you’ll also find private mortgage-reducing term assurance, which is similar to HPS. However, some private mortgage-reducing insurance plans may include critical illness coverage. This could help to plug any financial gaps related to your mortgage, should your existing critical illness coverage from your life/term insurance plans be insufficient for your home loan.

 

How can I be exempted from the Home Protection Scheme?

Those with sufficient insurance coverage that is enough to cover their outstanding housing loan up to the full term of age 65 (whichever is earlier) can apply to be exempted from the Home Protection Scheme.

These are some of the accepted types of insurance policies (traditional/investment-linked):

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

Note: Group policies, policies with loans attached, policies from insurance companies not registered in Singapore, policies in foreign currency and health/general insurance policies are some of the types of insurance plans that are not accepted.

Even if you already have these plans in place, you must FIRST get the HPS cover if you are planning to use your CPF savings to pay for your mortgage, THEN apply for an exemption after you have obtained legal ownership of your HDB flat.

Some people opt for exemptions for varying reasons, such as:

  • Having existing insurance coverage (by getting HPS, they will be over-insured)
  • Not finding HPS value for money (based on their own mortgage amount and insurance premium calculations)
  • Planning to sell their HDB flat after the 5-year minimum occupancy period (hassle of re-applying for HPS should they buy a new HDB property as HPS is not portable/transferrable)
  • Planning to sell their HDB flat and upgrade to a private property 
  • Wanting to get a private MRTA for the added critical illness coverage

TL;DR, the Home Protection Scheme is compulsory for most of us HDB home owners. Application for exemption comes later, approval is on a case-by-case basis. Sure, there are some coverage gaps (i.e. for critical illness), but fingers crossed that this will be updated in the future.

 

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This article was written by Mary Wu, who hopes to share what she's learnt from her home-buying and renovation journey with PropertyGuru readers. When she's not writing, she's usually baking up a storm or checking out a new cafe in town.

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