Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Sunday, 31 May 2015

3 Common Questions for CPF HPS

As promised in our previous blog post, here are the answers to 3 common questions that people have on the CPF Home Protection Scheme (HPS).

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1. Can I be exempted from paying the HPS?

If you have an insurance policy that is enough to cover your outstanding housing loan up to the full term of loan or age 65, you can apply for Exemption from Home Protection Scheme. You may apply to be exempted online via my cpf Online Services. You will get a full premium refund into your CPF Ordinary Account (OA) if the exemption application is received (by the Board) within one month from the issuance of the HPS cover. Otherwise, a pro-rated refund will be given to your CPF OA upon the termination of your HPS cover. Alternatively, you can print Form HPS/2 and submit the completed form to the Board for processing.

The types of insurance policies, both conventional and investment-linked, that are acceptable are:
a) Whole Life
b) Term Life
c) Endowments
d) Life Riders (must be attached to a basic policy)
e) Mortgage Reducing Term Assurance (MRTA) / Decreasing Term Rider

You may also apply to be exempted from HPS even if you to used your CPF savings to pay for the monthly housing installments. However, in our opinion, it is not advisable to do so as this scheme is primarily to prevent you from losing your home if you are unable to pay the loans. You have to apply for HPS first if you are planning to use your CPF savings for your monthly housing loan installments. You can then apply for HPS exemption after you have obtained legal ownership of the flat. In this case, HPS exemption is subject to the CPF's approval. Similarly, it can be applied via my cpf Online Services or submitting the Form HPS/2.

2. How much am I paying for this protection?

Fortunately, there is a simple method for this. You can visit the following link to obtain the premium of HPS:

If you are wondering how are the premium calculated, the premium is calculated based on the following factors:

- Outstanding housing loan on the flat
- Loan repayment period
- Type of loan (concessionary or market rate)
- Sex and age of the applicant

Premiums are generally higher for higher share of coverage, larger loan amounts or longer repayment periods. The premiums would be lower for younger persons and females.

3. What happens if I do not pay for HPS cover and it lapses?

Similar to all insurance policies, if you do not pay the premiums, the policy will simply lapse. What will happen then? You will not be able to use your CPF savings to service your housing loan and in order to continue doing so, you will have to apply for HPS again. This time it will be subjected to underwriting and your health condition at the time of application.

More information can be found on the CPF website HERE. We hope that our blog will be able to garner more interest and stimulate curiosity of fellow readers on the scheme to research more on their own. This would be more fruitful in answering their own personal questions. You can find out more 

If you have any other questions or feedback on the following topic, do drop us a mail or leave a comment below!
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1 comment:

  1. In my experience, it's cheaper if you find private insurers to do the same level of protection. But for that, you have to pay cash instead of paying thru CPF if you opt for HPS. If you consider CPF as your money, it'll be better to pay cash instead. For those who treat CPF as not their money (they can't touch it anyway), then paying HPS is a better deal.