Becoming a homeowner can be a tedious and tiring process. There’s endless paperwork and work to do, from renovation woes to buying home insurance. And for those buying HDB flats, there’s just one more thing you need to know: Home Protection Scheme (HPS). 

Having existed for two decades, the Home Protection Scheme saw its premiums reduced on July 1, 2021 (after a previous reduction in 2018). If you’re a new homeowner, here are nine things you should know about the HPS.

1. What is the Home Protection Scheme?

The Home Protection Scheme is mortgage-reducing insurance meant to protect you and your family from losing your HDB flat if misfortune falls on you. 

In the event of death, terminal illness, or permanent disability, HPS will pay off your entire outstanding mortgage, with the sum assured for the insurance reduced proportionately based on the remaining amount payable for your home loan. 

2. Who’s eligible for the Home Protection Scheme?

It’s compulsory to be insured under HPS if you’re living in an HDB flat and paying off your monthly housing loan instalments with your CPF savings.

When you meet the following criteria, your HPS cover will start:

• You are the legal owner of the flat
• You have completed either the loan application with HDB or the approved mortgage and are now legally responsible for the loan
• You have made your health declaration which is for HPS coverage
• You have paid the first HPS premium

3. How long am I covered under the Home Protection Scheme?

If you’re newly insured under HPS, you’ll be covered under the Annual Premium HPS until you’re 65 years old or until your housing loan is paid fully, whichever comes first.

If you were insured before March 1, 2001, that means you have Single Premium HPS that will cover you up to 55 to 60 years old, depending on when you join the scheme. 

4. What if I’m a co-owner of the flat?

Co-owners, even if they’re your spouse, can have separate HPS coverages! The coverage ratio can be different, but the total coverage of all owners should be at least 100 per cent of the outstanding loan. For example, you and your co-owner can each insure coverage of 50 per cent, or you can opt to cover 20 per cent while they cover 80 per cent. 

You and your co-owner can also pay an HPS cover of 100 per cent each so that if something happens to either one of you, the home loan will be fully paid for. But the premiums will be higher, of course.

5. How much is the Home Protection Scheme?

The annual premium varies based on four factors:

• Outstanding housing loan on the flat
• Type of loan
• Loan repayment period
• Age and gender of the applicant

If you have a larger loan or longer repayment periods, your premium will generally be higher. Calculate your HPS premium here.

The good news is that you only need to pay the annual premium for 90 per cent of your HPS cover period! So, if your HPS cover period is 20 years, that means you only need to pay the premium for 18 years.

6. How can I pay for the premium?

The premium is automatically deleted from your CPF Ordinary Account (AO) every year. The HPS premium deduction is deducted first before your monthly housing instalment to ensure that you’re still insured under HPS before servicing your housing loan. 

If your OA has insufficient balance, you’ll receive a notification to top up your OA. You can make the payment through eNETS or Paynow at e-Cashier, or cash at any Singapore Post branch office.

If your family member is a co-owner, they can also authorise the Board to deduct the premium difference from their CPF OA savings.

You must pay your HPS premium on time, or your HPS cover will lapse! If that happens, you’ll have to re-apply for HPS cover, and your eligibility will be subject to your health condition at the point of the re-application. 

7. How can I apply for the Home Protection Scheme?

If you’re taking an HDB loan, apply for HPS cover at any HDB office or branch office when you’re applying to use your CPF for the monthly housing instalment.

But if you’re taking a bank loan, you’ll need to apply for HPS at my cpf first before applying to withdraw your CPF savings for your monthly housing instalments. 

8. Can I opt out of the Home Protection Scheme?

While it’s generally recommended to have HPS, you’re not obligated to do so. But you need one of these types of insurance policies:

• Whole life insurance
• Term life insurance
• Endowment plan
• Life riders (must be attached to a basic policy)
• Mortgage Reducing Term Assurance (MRTA) / Decreasing Term Rider

Even if HPS is not compulsory for you, it’s usually a good idea to have mortgage insurance.

9. What’s the difference between HPS and other private mortgage insurances?

There are three main differences you should take note of:

• HPS is not transferable, so if you buy a new HDB flat, you’ll have to terminate HPS for your old property and apply for HPS for your new property. 
• HPS only covers you until you’re 65 years old, but private mortgage insurances may have a later or no maximum age. 
• HPS will repay the HDB or your bank directly if a successful claim is made, but private mortgage insurances may give you the payouts directly.

Private mortgage insurances can be more customisable, such as offering riders or add-ons.

The good thing is that HPS is usually cheaper than private plans, so you can first purchase HPS, then add additional private insurance coverage later on.

ALSO READ: 10 best home insurance plans in Singapore for HDB & private property (2022)

This article was first published in 99.co.