If you’re a homeowner in Singapore, you’re probably familiar with the Home Protection Scheme (HPS). It’s a mortgage-reducing insurance scheme that’s designed to protect your HDB flat and your family in case you’re unable to repay your home loan due to death, terminal illness, or total and permanent disability. But is HPS worth it?
Well, that depends on your specific situation. There are pros and cons to the HPS, and it’s important to understand them before making a decision. On the one hand, HPS is compulsory for Singaporeans who use their CPF monies to service their monthly home loan repayments, so you won’t have a choice in the matter. On the other hand, HPS only covers death, terminal illness, and total and permanent disability, so you may want to consider additional private insurance coverage to ensure that you’re fully protected.
In this article, we’ll take a closer look at the HPS and help you determine whether it’s worth it for you. We’ll explore the financial aspects of HPS, compare it with other insurance options, discuss HPS exemption and alternatives, and offer tips for managing HPS throughout your home ownership. We’ll also provide answers to frequently asked questions about HPS in the Singaporean context. So, let’s get started!
Key Takeaways
- The Home Protection Scheme (HPS) is a mortgage-reducing insurance scheme that’s compulsory for Singaporeans who use their CPF monies to service their monthly home loan repayments.
- HPS only covers death, terminal illness, and total and permanent disability, so you may want to consider additional private insurance coverage to ensure that you’re fully protected.
- Before making a decision about HPS, it’s important to understand the financial aspects of the scheme, compare it with other insurance options, and explore HPS exemption and alternatives.
Understanding the Home Protection Scheme
If you are a Singaporean HDB flat owner, you may have heard of the Home Protection Scheme (HPS). It is a mortgage-reducing term insurance scheme designed to provide protection for you and your family in the event of death, terminal illness, or total and permanent disability. In this section, we will give you an overview of what HPS is, its eligibility requirements, and the coverage and benefits you can expect.
What Is HPS?
HPS is a scheme administered by the Central Provident Fund Board (CPFB) that provides insurance coverage for HDB flat owners who use their CPF Ordinary Account savings to pay for their home loans. If you are eligible, HPS will help ensure that you and your family do not lose your HDB flat due to unforeseen circumstances that prevent you from repaying your home loan.
HPS Eligibility Requirements
To be eligible for HPS, you must meet the following requirements:
- You must be a Singapore Citizen or Permanent Resident
- You must have used your CPF Ordinary Account savings to pay for your HDB flat
- You must be between the ages of 21 and 65 years old
- You must not have any pre-existing medical conditions at the time of application
Coverage and Benefits
HPS provides coverage for death, terminal illness, and total and permanent disability. In the event of any of these occurrences, HPS will pay off the outstanding housing loan amount up to the maximum sum assured. The maximum sum assured is based on the outstanding housing loan amount and the age of the insured at the time of application.
HPS coverage is compulsory for HDB flat owners who use their CPF Ordinary Account savings to pay for their home loans. However, if you own an Executive Condominium or a private condominium, you are not eligible for HPS coverage. In such cases, it is advisable to purchase a separate mortgage insurance policy to protect your home loan.
In conclusion, HPS is a valuable scheme that provides protection for HDB flat owners and their families in the event of unforeseen circumstances. If you meet the eligibility requirements, it is highly recommended to enroll in HPS and secure your home loan.
Financial Aspects of HPS
If you’re wondering whether HPS is worth it in Singapore, you need to consider the financial aspects of the scheme. Here are some important things you should know:
HPS Premium Calculations
The premium for HPS is calculated based on the outstanding housing loan and the loan repayment period. You can use the HPS premium calculator on the CPF website to estimate your annual premium payments.
Loan Repayment and Premiums
When you use your CPF savings to repay your housing loan, you are required to join HPS. This means that your HPS premiums will be deducted from your CPF Ordinary Account (OA) automatically. The premiums are paid annually and are calculated based on your outstanding housing loan.
CPF Usage for HPS
If you’re wondering whether you should use your CPF savings to pay for HPS premiums, you need to consider the long-term impact on your CPF savings. While using your CPF savings can help you reduce your cash outlay, it also means that you will have less money in your CPF OA to earn interest and grow over time.
In general, it’s a good idea to use your CPF savings to pay for HPS premiums if you have enough savings in your CPF OA. However, if you have a low balance in your CPF OA, you may want to consider paying your HPS premiums in cash instead.
Overall, HPS can be a worthwhile investment if you’re looking for a way to protect your home and your loved ones. However, it’s important to consider the financial aspects of the scheme before you make a decision.
Comparing HPS with Other Insurance Options
If you are an HDB owner, you have the option of choosing between HPS and other insurance policies to protect your home. Here are some of the most common options and how they compare to HPS:
MRTA vs HPS
Mortgage Reducing Term Assurance (MRTA) is a type of mortgage insurance that covers the outstanding loan amount in the event of death, terminal illness, or total and permanent disability. Like HPS, MRTA is designed to protect your home and your loved ones from financial hardship.
One key difference between MRTA and HPS is that MRTA coverage decreases over time, while HPS coverage remains the same. This means that the premium for MRTA is usually lower than that of HPS. However, MRTA only covers death, terminal illness, and total and permanent disability, while HPS also covers critical illnesses.
Private Mortgage Insurance
Private Mortgage Insurance (PMI) is a type of insurance that protects the lender in the event that the borrower defaults on the loan. PMI is typically required for borrowers who make a down payment of less than 20% of the home’s value.
PMI does not protect the borrower or the borrower’s family in the event of death, illness, or disability. Therefore, PMI is not a substitute for HPS or other insurance policies that provide this type of coverage.
Term Life and Whole Life Insurance
Term Life Insurance and Whole Life Insurance are two types of life insurance policies that provide coverage in the event of death, illness, or disability. Term Life Insurance provides coverage for a specific period of time, while Whole Life Insurance provides coverage for the entire life of the policyholder.
Both types of insurance can be used to protect your home and your loved ones from financial hardship in the event of your death or disability. However, they are not specifically designed to cover your mortgage loan like HPS or MRTA.
Conclusion
When it comes to protecting your home and your loved ones, there are many insurance options to choose from. HPS is a good option for HDB owners who want affordable coverage for death, terminal illness, and total and permanent disability. However, it may not be the best option for everyone. Be sure to compare HPS with other insurance policies to find the one that best suits your needs.
HPS Exemption and Alternatives
If you are a Singaporean who has taken a home loan from HDB, you are required to participate in the Home Protection Scheme (HPS), which is a mortgage-reducing insurance scheme. However, there are certain criteria for HPS exemption.
Criteria for HPS Exemption
You can be exempted from HPS if you have your own private insurance that provides sufficient coverage for your outstanding housing loan up to the full term of the loan or age 65, whichever is earlier. The minimum sum assured for the insurance coverage must be equal to the outstanding housing loan at the point of exemption.
To be eligible for HPS exemption, your private insurance must also cover the same events as HPS, such as death, terminal illness, and total permanent disability. Additionally, the coverage period of your private insurance must not be less than the remaining loan tenure or until age 65, whichever is earlier.
Opting Out of HPS
If you are paying off your HDB loan using only cash, taking up HPS becomes voluntary. However, it is recommended that you participate in HPS or have your own private insurance to protect your home in case of unforeseen circumstances.
Alternatives to HPS
If you do not qualify for HPS exemption or do not wish to participate in HPS, you can consider other alternatives such as mortgage insurance plans offered by private insurers. These plans provide coverage for the same events as HPS, but may offer different benefits and premiums.
It is important to compare the premiums, coverage, and exclusions of different insurance plans before making a decision. While HPS is relatively inexpensive compared to private insurance plans, having your own private insurance may provide more comprehensive coverage and flexibility.
Overall, HPS is a mandatory scheme for most HDB homeowners in Singapore. However, if you meet the criteria for HPS exemption or have your own private insurance, you can opt out of HPS or supplement it with additional coverage.
HPS and Your Family
When you purchase a home in Singapore, you want to ensure that your family is taken care of in case anything happens to you. The Home Protection Scheme (HPS) is designed to provide you with peace of mind by protecting your family and co-owners in the event of death, terminal illness or total permanent disability.
Impact on Family and Co-owners
As a homeowner, you want to ensure that your family is protected in case anything happens to you. HPS provides insurance protection that ensures that your family will not lose your HDB flat if you die and can’t repay your home loan. This means that your family will not have to worry about losing their home if something happens to you.
In addition, HPS covers co-owners as well. If you co-own your HDB flat with someone else, HPS will cover your percentage share of the cover. This means that both you and your co-owner will be protected in case anything happens to either of you.
In the Event of Death or Disability
If you pass away, are diagnosed with a terminal illness, or become totally and permanently disabled and can’t repay your home loan, HPS will help ensure that you and your family do not lose your HDB flat. In the event of death, the HPS will pay off your entire outstanding mortgage, with the sum assured for the insurance reduced proportionately based on the outstanding loan balance at the point of claim. If you become totally and permanently disabled, HPS will pay off your entire outstanding mortgage, up to the sum assured for the insurance.
It’s important to note that HPS coverage ends when you reach the age of 65. However, if you are permanently disabled before the age of 65, you will continue to be covered for as long as you are permanently disabled.
Overall, HPS is worth considering if you want to ensure that your family and co-owners are protected in case anything happens to you. It provides insurance protection that ensures that you and your family will not lose your HDB flat if you die and can’t repay your home loan.
Managing HPS Throughout Your Home Ownership
HPS Coverage Period
When you purchase a Housing and Development Board (HDB) flat in Singapore, you are required to take up the Home Protection Scheme (HPS) to protect your home against unfortunate events such as death, terminal illness, or total permanent disability. The coverage period of HPS is up to the age of 65 or until the housing loans are paid up, whichever is earlier.
It is important to note that the HPS coverage period is tied to the loan repayment period. If you choose to pay off your loan earlier, your HPS coverage period will also end earlier. On the other hand, if you extend your loan repayment period, your HPS coverage period will also be extended.
Premium Refunds and Adjustments
As a mortgage-reducing insurance, the HPS premium is calculated based on the loan amount and the age of the insured member. The premium is paid monthly using your Central Provident Fund (CPF) Ordinary Account savings.
If you sell your HDB flat or refinance your loan, you can request for a refund of the remaining HPS premium. However, do note that the refund amount may be lower than the total premium paid due to administrative fees and charges.
It is also important to keep your HPS certificate updated with the CPF Board. If there are any changes to your personal particulars or loan repayment period, you should inform the CPF Board to ensure that your HPS coverage and premium are adjusted accordingly.
By managing your HPS coverage and premium throughout your home ownership, you can ensure that your home is protected and that you are not overpaying for insurance.
HPS in the Singaporean Context
If you are a Singaporean planning to buy an HDB flat, you will be required to take out the Home Protection Scheme (HPS) as a form of mortgage insurance. This is a mandatory requirement for those who are using their CPF savings to pay for their monthly housing instalments.
Legal and Market Considerations
The HPS is administered by the Central Provident Fund Board (CPFB), and its purpose is to protect HDB owners against undesirable events which result in them not being able to repay their housing loans. As the legal owner of the flat, you are responsible for ensuring that the HPS is in place throughout the duration of your housing loan.
While you have the option to choose between an HDB loan or a bank loan, the HDB concessionary loan comes with certain benefits, such as a lower interest rate and exemption from HPS for those with sufficient fire insurance coverage. However, if you opt for a bank loan or do not meet the exemption criteria, you will need to take out HPS.
HPS’s Role in Singapore’s Housing Policy
The HPS plays a crucial role in Singapore’s housing policy, as it ensures that HDB owners are protected in the event of unforeseen circumstances such as death, terminal illness, or permanent disability. The insurance coverage is based on the outstanding housing loan amount and decreases over time as the loan is repaid.
It is important to note that the HPS only covers the outstanding housing loan amount, and not any other outstanding debts, such as renovation loans or personal loans. Therefore, it is recommended that you consider taking up additional insurance coverage to protect yourself and your family in the event of unexpected events.
In conclusion, the HPS is an important aspect of Singapore’s housing policy, and it serves to protect HDB owners against unforeseen circumstances. While it is mandatory for those using their CPF savings to pay for their monthly housing instalments, it is also recommended for those who are not eligible for exemption from HPS.
Frequently Asked Questions
What exhilarating benefits can I expect from enrolling in HPS?
Enrolling in the Home Protection Scheme (HPS) can provide you with peace of mind knowing that your HDB flat will be protected in the event of death, terminal illness, or total and permanent disability. The premiums for HPS are also affordable, making it accessible to most CPF members who own an HDB flat. Additionally, you can use your CPF Ordinary Account (OA) to pay for the premiums.
How can I effortlessly check my current HPS coverage status?
You can easily check your current HPS coverage status by logging in to your CPF account on the CPF website. From there, you will be able to view your HPS coverage details, including the coverage amount and premium payable.
In what thrilling ways can I settle my HPS premiums?
You can settle your HPS premiums through various payment modes, including GIRO, AXS stations, and eNETS. By setting up a GIRO arrangement, you can enjoy the convenience of having your premiums deducted automatically from your bank account.
Can I joyously pay for HPS using my CPF funds?
Yes, you can use your CPF OA to pay for your HPS premiums. This means that you can pay for your premiums without having to use your cash.
What are the captivating reasons one might seek an exemption from HPS?
There are several reasons why you might seek an exemption from HPS, including having sufficient insurance coverage from other sources, being a non-working spouse, or having a pre-existing medical condition that makes you ineligible for coverage. However, it is important to note that exemptions are subject to approval by the CPF Board.
Are there any limitations to HPS that I should be keenly aware of?
While HPS provides basic coverage for your HDB flat, it does not cover other types of property or provide additional coverage for critical illnesses or accidents. It is also worth noting that HPS only covers the outstanding housing loan amount, which means that your family may not receive any payout if the outstanding loan amount is fully paid off.
