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Understanding How The CPF Home Protection Scheme (HPS) Works

If you’re intending to use your CPF monies to pay for your monthly home loan instalments, then the Home Protection Scheme is compulsory. Here’s how it works.

Buying a home is one of the largest purchases most Singaporeans will ever make. Just under 80% of Singaporeans live in Housing Development Board (HDB) flats, 90% of whom own their homes. The Home Protection Scheme (HPS) was introduced to protect HDB homeowners and their families from losing their HDB flat in the event of death, terminal illness or total permanent disability before their mortgage is paid up.

Administered by the Central Provident Fund (CPF) Board, HPS is compulsory for Singaporeans who choose to service their monthly home loan repayments using CPF monies – whether partially or fully – unless they qualify for exemptions or are excluded due to pre-existing conditions. If you are not using your CPF monies to service your home loan, but still want to be covered under HPS, you can.

HPS is only for HDB or DBSS flats. It does not cover private residences like condominiums, executive condominiums (ECs), HUDC flats, and landed properties. At the same time, HPS is applicable only if you have a housing loan in the first place.

Read Also: What Happens To Your HDB Flat After You Pass On Without Leaving A Will?

How Does The Home Protection  Scheme (HPS) Coverage Work?

As a mortgage-reducing insurance, HPS provides coverage for your outstanding mortgage amount until the age of 65, or until your housing loans are fully paid up, whichever is earlier. As you pay your monthly home loan instalments, your outstanding mortgage gradually reduces, and so will the sum assured over the policy period.

In the event of permanent incapacity or death, the CPF Board will pay the sum assured, which will go towards taking care of the housing loan so that your family does not need to worry about not being able to keep up with your share of payments and risk losing their home.

CPF Board requires 100% of the outstanding home loan amount to be insured. They recommend that this coverage is spread according to your share of responsibility in repaying the mortgage. For example, if you are paying 70% of the monthly housing repayments, your share of HPS cover should be at least 70%. Your co-owner should then be covered for at least 30%.

100% is the minimum amount coverage. Each of you can opt to be insured for 100% of the outstanding loan amount – giving you a combined 200% coverage. This means that in the event something untoward happens to one of you, the outstanding home loan will be fully paid by the CPF Board. Of course, you need to weigh the pros and cons as premiums will be higher for more coverage.

Whenever the share of responsibility for paying the monthly mortgage changes, or if you used a lump sum of money to pay more of the loan amount earlier than expected, you should inform the CPF Board and get your HPS premiums adjusted.

Read Also: Completed Your Dream HDB Renovation? Here’s Why You Should Buy Insurance Immediately To Protect Your Home

What Is The Eligibility Criteria For Coverage Under The HPS?

The eligibility for coverage under the HPS is subject to the applicant being in good health. This means that CPF members with serious pre-existing illnesses are not eligible for HPS, though they can still use their CPF to service their home loans. Examples of serious pre-existing conditions include cancer, kidney failure, liver failure or transplant, and diabetes with complications such as retinopathy or nephropathy.

Rather than have an exhaustive list of pre-existing illnesses, the CPF Board consults a panel of doctors and assesses individual cases based on severity, prognosis and control of the medical condition, as well as the applicant’s health risk profile.

If you are not eligible to be enrolled under HPS, your only option would be to turn to private insurers. You may still be able to get coverage for situations not arising from your pre-existing conditions.

Homeowners who face financial difficulties in servicing their HDB monthly loan instalments due to death or disability, HDB has a range of financial assistance schemes available.

What Are The Exclusions For HPS Claims?

Similar to other insurance policies, you will not be able to make claims under HPS in the first policy year of the cover if the death or permanent incapacitation is due to self-inflicted injury or suicide, committing a criminal offence punishable by death, or​ if the claim arose out of an intentional criminal act.​​

Members will also not be able to make claims under HPS if: they were not in good health before the commencement of HPS cover; information provided was false or misleading; or​ the claim arose from wars or participation in a riot​.

Is The HPS Compulsory For All HDB Owners?

You must be insured under HPS if you are using your CPF to pay for your HDB flat. However, you can apply to be exempted if you already have other insurance policies that ensure your share of the mortgage is covered in the event something happens to you. Such insurance policies include whole life, term life, riders attached to a basic policy, mortgage reducing term assurance, or decreasing term riders.

Your exemption from HPS may be revoked if the insurance policies you used to gain approval for exemption is discontinued or changed. If you wish to be exempted from HPS again, you will need to apply for it again.

HDB homeowners using a bank home loan are not automatically covered under HPS nor do they have to be covered. Such homeowners need to apply on the CPF website if you want coverage under HPS.

For homeowners covered under HPS, there may be a small gap in your coverage that you may be overlooking. If you ever sell your home to purchase another HDB flat, you will need to apply for HPS again rather than have your coverage ported over. This means any new medical or health condition you may have developed will be taken into consideration for your eligibility.

How Much Are HPS Premiums?

The CPF website has a Home Protection Scheme Premium Calculator you can use to gauge how much your premiums will be. According to CPF, the HPS premium is calculated based on five factors:

1) Outstanding housing loan on the flat

2) Loan repayment period of the flat

3) Type of loan (concessionary or market rate)

4) Age and gender of member

5) Percentage share of cover for the flat

For HPS, you only need to pay premiums for 90% of your cover period. That means if you need to be covered for 25 years, you’ll only need to pay premiums for the first 22 and a half years. In the final 2 and a half years, you will receive coverage without having to pay any premiums.

HPS premiums can be paid using funds from your CPF Ordinary Account (OA) and are deducted automatically yearly. If your OA has insufficient funds, you will need to pay in cash to ensure your HPS cover is not affected. Alternatively, your co-owner can also authorise CPF to deduct from their CPF to pay for your HPS premiums.

It is important that you do not let your HPS policy lapse. If that ever happens, you will need to re-apply for cover and your eligibility will depend on your health situation at the point of re-application. New health and medical conditions may be taken into consideration at this point.

You can visit the CPF website for more information about HPS and how to apply for it.

Having a mortgage is a huge liability, and a mortgage-reducing insurance like HPS can be beneficial and reduce stress. The premiums are affordable for the coverage you enjoy, and you’re able to pay HPS premiums using your CPF OA. If anything, your private insurance should complement your HPS policy, rather than replace it.

The CPF website also states that you need to adjust your HPS coverage if:

  • you change the loan repayment amount or period
  • your share of the loan repayment changes

This will ensure that you are not over insured and that your share of the outstanding loan is covered.

Read Also: 4 Insurance Policies Singaporeans Can Pay Using Their CPF Account


This article was originally written on 10 January 2018 and updated with new information.

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