What is the Home Protection Scheme (HPS)?

The Home Protection Scheme (HPS) is a mortgage insurance scheme administered by the Central Provident Fund Board. It is compulsory for CPF members who use their CPF Ordinary Account savings to pay their monthly housing instalments for an HDB flat. HPS is also available for members who take bank loans and use CPF savings for repayment, though members can apply for exemption if they have qualifying private insurance coverage.

HPS provides insurance coverage that pays off the outstanding HDB loan if the insured member dies, is diagnosed with a terminal illness, or becomes totally and permanently disabled. The coverage ensures that the member's family does not inherit the mortgage burden and can continue living in the flat.

HPS premiums are paid from the member's CPF Ordinary Account and are generally affordable. The premium amount depends on the insured amount (your outstanding loan balance), your age, gender, the type of loan (concessionary or market rate), and the remaining loan tenure. Premiums decrease over time as your loan balance reduces. Members only pay premiums for 90% of the cover period.

HPS insures CPF members until they turn 65 or until the housing loan is fully paid up, whichever is earlier. The total share of cover per household must add up to at least 100% of the outstanding loan, with each member insuring according to their share of responsibility in repaying the loan.

Members can opt to insure a percentage of their share of the outstanding loan rather than the full amount, though this is not advisable as it leaves the family exposed to partial liability.

HPS coverage ceases when the HDB loan is fully repaid, when the insured member turns 65, or when the flat is sold. If you refinance from an HDB loan to a bank loan, you should review your HPS coverage and may need to arrange alternative mortgage insurance if you apply for exemption.

While HPS provides a basic safety net, it may not cover all scenarios. For example, it does not cover critical illnesses that do not result in total permanent disability, and coverage is not portable if you sell your flat and buy another property. Supplementing HPS with a private term life policy or Mortgage Reducing Term Assurance (MRTA) can provide more comprehensive protection for your family.

Cashew recommends that all homebuyers have adequate insurance coverage in place and can connect you with insurance specialists to review your overall protection needs.