Home Protection Scheme(HPS)
The Home Protection Scheme (HPS) is a mortgage-reducing insurance scheme designed to safeguard owners of HDB flats in Singapore against the inability to repay their housing loans due to unforeseen circumstances such as terminal illness, permanent disability, or death. Administered by the Central Provident Fund Board (CPFB), HPS ensures that the remaining housing loan on the property is settled, thus relieving the family members of the financial burden.
Key Features:
- Coverage: HPS covers members up to the age of 65 or until the housing loan is fully repaid, whichever is earlier.
- Eligibility: Applicants must be in good health, with specific exclusions for major pre-existing medical conditions.
- Exemptions: Individuals may be exempt from HPS if they have existing life insurance policies that cover the outstanding loan amount for their HDB flat in the event of death, terminal illness, or permanent disability.
- Premiums: HPS premiums are calculated based on several factors, including the outstanding housing loan amount, loan repayment period, type of loan, age, gender, and the percentage share of coverage. Premiums can be paid using CPF Ordinary Account (OA) funds or cash if insufficient CPF funds are available.
Importance in Real Estate:
HPS plays a crucial role in Singapore’s real estate landscape by providing financial security and peace of mind to HDB homeowners and their families. It ensures that homeownership is not jeopardized by unforeseen events, making it an essential consideration for potential HDB buyers and existing owners.
Compulsory Nature:
HPS is mandatory for all Singaporeans who use their CPF funds to make partial or full monthly home loan payments for their HDB flats. However, individuals not utilizing CPF funds for their home loan or those with exempting conditions may choose not to participate in the scheme.