Investment Stab

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

Friday 29 May 2015

CPF: Home Protection Scheme: What does it provide?

22:09 , 2 comments
Today's post will be regarding the CPF Home Protection Scheme (HPS).
This is part of our "CPF Housing-Related" posts.

In the rare occurrence of a blue moon, some of you may have realised that after reading your CPF account statements, money in your CPF OA is deducted under an entry denominated as 'HPS'. So what is this scheme that is slowly and quietly siphoning cash from your retirement nest for several hidden centuries?!

As defined on CPF website, Home Protection Scheme (HPS) is a "mortgage reducing insurance which insures CPF members and their families against losing their homes should members become physically / mentally incapacitated or pass away before their housing loans are paid up.".

If I could, let me paraphrase this into simpler term. HPS is basically an insurance that has a reducing sum assured feature which can be used to cover the reducing mortgage payments, should you be physically / mentally incapable of doing so, or upon your death. However, this insurance will lapse if your housing loan is paid up or until the age of 65. Similar to all insurance, it is dependent on your health conditions.

Another point to note is that you have to be insured under HPS if you want to use CPF savings to pay your monthly housing installments under the Public Housing Scheme, which typically includes all types of public housing (HDB, DBSS etc).

In my opinion, this insurance is of utmost importance as it transfer the risks of being unable to pay due to illness or death. Being a direct recipient of this insurance, I am glad to say that my home is protected by this scheme. It allows you to tap on your CPF funds for premium payment, which also means less cash payments from your pockets. 

We will be subsequently posting on 3 questions that people have on the HPS. 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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2 comments:

  1. Lizardo31 May 2015 at 17:23

    Probably one of the cheapest term insurance policy around?

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    Replies
    1. cheez1 June 2015 at 23:46

      Hi Lizardo,

      Please check out the link below and its comment section.
      As per commented by our reader/fellow blogger, HPS might not be cheaper than outside private insurers.
      http://investmentstab.blogspot.sg/2015/05/3-common-questions-for-cpf-hps.html

      Thank you for your comment! :)

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