Coverage Type
Decreasing Term
Protection Period
Loan Tenure
Purpose
Home Security
For most households in Singapore, the home is the largest financial commitment. A mortgage term plan ensures the home remains secure even if income is disrupted, protecting your family's most important asset.
The Basics
A Mortgage Term Plan is a term insurance designed to cover outstanding housing loans in the event of death, total permanent disability, or terminal illness.
Coverage reduces as loan reduces
Protection lasts for the loan period
Lower cost compared to permanent insurance
Purpose
Provides a lump sum to offset outstanding housing loan, ensuring the family can keep the home without financial burden.
How It Works
Loan starts high
Coverage reduces each year
At end of tenure, loan is $0
Key Point: Coverage aligns with outstanding loan, not property value.
The Reality
Income Stops
Due to illness or accident
Health Changes
Unexpected diagnosis
Unexpected Events
Life's uncertainties
Without protection, the burden of the outstanding loan transfers to family members, potentially forcing a sale of the home.
Comparison
Low cost relative to coverage
Immediate protection from day one
Preserves savings for other goals
Requires large capital upfront
Depletes long-term plans
May affect retirement goals
Understanding the Difference
Two different approaches to protecting your housing loan - understanding which suits your needs.
Coverage decreases with outstanding loan
Coverage stays constant
- - - Loan reduces
| Feature | Decreasing Term (MRTA) | Level Term ✓ |
|---|---|---|
| Coverage Amount | Decreases over time to match loan balance. | Stays the same throughout the policy term. |
| Premium Cost | Lower - you pay less for reducing coverage. | Higher - constant coverage costs more. |
| Best For | Purely mortgage protection only. | Mortgage + income replacement + other needs. |
| Portability | Tied to specific property/loan. | Portable - can use for new property. |
| Excess Payout | No - payout matches outstanding loan. | Yes - excess goes to family for other needs. |
| Planning for Upgrade | Need new policy when upgrading home. | Same policy continues to protect you. |
| Critical Illness Add-on | Some plans offer CI rider. | Commonly available with CI and ECI riders. |
| HPS Exemption | Eligible for HPS exemption. | Eligible for HPS exemption. |
Both serve different roles and can complement each other. Many homeowners use a Level Term plan for comprehensive protection while applying for HPS exemption.
More versatile protection that covers mortgage, income replacement, critical illness, and more - all in one policy.
For HDB Owners
A mandatory mortgage-reducing insurance administered by CPF for HDB flat owners.
The Home Protection Scheme (HPS) is a mortgage-reducing term insurance administered by CPF Board. It protects HDB homeowners and their families against losing their flat if the insured member passes away, is diagnosed with a terminal illness, or becomes totally and permanently disabled.
Coverage Period: Until age 65 or when the housing loan is fully paid off, whichever is earlier.
Death
Outstanding loan paid off in full
Terminal Illness
Less than 12 months to live
Total Permanent Disability (TPD)
Unable to work due to permanent disability
HPS premiums are tailored to your specific circumstances and vary based on several factors:
Loan Amount
Higher loan = Higher premium
Loan Tenure
Longer tenure = Higher premium
Loan Type
Bank loans cost more
Age & Gender
Older = Higher premium
Good to Know
You only pay premiums for 90% of the coverage period. For example, if your coverage period is 30 years, you'll only pay for 27 years. Premiums are deducted from your CPF Ordinary Account annually.
Calculate Your HPS Premium
Use CPF's official calculator
Your share of HPS cover should at least match the proportion of monthly housing instalments you pay.
You must have 100% coverage of the total loan amount.
If you pay 70% of instalments, your HPS should be at least 70%.
Tip: Co-owners can each opt for up to 100% coverage. This ensures that if either party passes away, the entire loan is paid off, providing complete protection for the surviving party.
HPS is often confused with other types of insurance. Here's what it doesn't cover:
Fire insurance covers damage to your flat's structure from fire/floods. It's separate and mandatory for HDB flats.
Home insurance covers your belongings (furniture, appliances). It does not cover your loan.
DPS provides up to $70,000 for dependants. Not sufficient for housing loan protection.
HPS does not cover critical illnesses like cancer, heart attacks, or strokes. Separate CI coverage is needed.
While HPS offers affordable basic protection, it has important limitations:
Only for HDB Flats
Not available for private property, ECs, or HUDC flats. Private owners must seek alternative coverage.
No Critical Illness Coverage
If diagnosed with cancer or stroke, HPS won't help with your mortgage. Additional CI coverage is essential.
Not Transferable
If you upgrade to a new property, HPS doesn't transfer. You'll need to reapply with new underwriting.
Coverage Ends at Age 65
If your loan extends beyond 65, you'll have no protection for the remaining years.
Maximum 100% Coverage
HPS only covers up to 100% of your loan. It doesn't provide for other financial needs like income replacement.
Comparison
Understanding the key differences helps you choose the right protection for your home.
| Feature | Home Protection Scheme (HPS) | Private Mortgage Term Plan |
|---|---|---|
| Property Type | HDB flats only. | HDB, Executive Condominiums, Private Property. |
| Coverage Type | Reducing (matches loan). | Reducing (MRTA) or Level (fixed). |
| Coverage Period | Up to age 65 or loan maturity. | Flexible, customizable. |
| Premium Payment | CPF Ordinary Account (OA). | Cash. |
| Flexibility | Tied to the property. | Transferable to new properties. |
| Riders/Extras | None (Basic coverage only). | Critical illness, premium waiver options. |
| Health Check | Simple declaration (or medical). | Detailed medical underwriting. |
| Joint Coverage | No (2 separate policies needed). | Yes (one joint policy available). |
| Claim Payout | Direct to HDB/mortgagee. | Lump sum to beneficiary. |
Government-backed option
More flexibility & coverage
Joint Coverage for Couples
Private plans can be more cost-effective for couples by offering one joint policy, whereas HPS requires two separate policies for co-owners.
HPS does NOT cover private residential properties, Executive Condominiums (ECs), or privatised HUDC flats. If you own private property, a Mortgage Term Plan is highly recommended.
For Those With Private Coverage
If you have suitable private insurance, you may apply for an exemption from HPS.
HPS exemption can be granted if your private insurance provides equivalent protection:
Whole Life Insurance
Term Life Insurance
Endowment Plans
Life Riders
Attached to basic policy
MRTA Plans
Mortgage Reducing Term
Decreasing Term Riders
Requirement: Your private insurance must cover the full loan repayment period or until age 65, whichever is earlier. The sum assured must be sufficient to cover the outstanding loan balance.
Contact Your Insurance Agent
Express your intention to apply for an HPS exemption with your current policy.
Complete Required Forms
Fill out the exemption application form and provide all relevant documents.
Insurer Submits to CPF
Your insurance provider will verify and submit the application to CPF Board.
CPF Assessment
CPF will assess your application and notify you of the outcome.
If exemption is approved within 1 month of your HPS cover start date, you'll receive a full refund of premiums to your CPF OA.
If approved later, you'll receive a pro-rated refund based on the remaining coverage period.
Check Your Exemption Eligibility
Use CPF's official exemption calculator
Important Warning
If your private insurance policies are terminated or lapse, your HPS exemption may be revoked. You may need to reapply for HPS coverage, which will be subject to new health underwriting.
Planning Principle
Your protection period should match the entire duration of your financial obligation.
Home Purchase
Loan Starts
Protected Period
Coverage Active
Loan Paid Off
Fully Owned
Protection duration should match outstanding loan period.
This ensures your family is covered for the entire duration of the financial obligation.
Clarity
Understanding these common myths helps you make better-informed decisions.
Belief
"CPF is enough to cover my loan."
Reality
CPF covers instalments, not full loan repayment in case of death or disability. Your family would still need to continue paying monthly or sell the home.
Belief
"I am healthy now, I can plan later."
Reality
Mortgage term plans are underwritten. Even minor health conditions (e.g., high cholesterol) can affect eligibility and increase premiums significantly.
Belief
"This is only needed for sole breadwinners."
Reality
Shared loans still create shared risk. If one co-owner cannot contribute, the other may struggle to maintain payments alone.
Belief
"HPS covers everything I need."
Reality
HPS only covers death, terminal illness, and TPD. It does NOT cover critical illnesses like cancer or stroke, which are more common causes of income loss.
Belief
"HPS will follow me if I upgrade my home."
Reality
HPS is tied to your current HDB flat. If you upgrade to a new property, you'll need to reapply and undergo fresh underwriting at your current age and health status.
Belief
"Fire insurance protects my mortgage."
Reality
Fire insurance covers physical damage to your flat from fire or floods. It does NOT pay off your housing loan if you pass away or become disabled.
The Purpose
Ensures your family can keep living in the home you've built together.
Keeps your retirement and emergency funds intact.
Provides peace of mind during uncertain times.
Advisors help align protection with your loan structure, not push products.
A home loan is long term.
Protection ensures the home stays yours.
Protect your biggest asset and ensure your family retains your home. Find out which mortgage protection option suits your needs.