Last Updated on by Tree of Wealth
The Home Protection Scheme – an insurance scheme under the CPF Board – prevents the loss of HDB properties in the event that the original owner is unable to continue making monthly housing payments to repay the loan they had initially taken to pay it off. This occurs when the owner is incapacitated from one of three things: total permanent disability (TPD), terminal illness (TI), or death. In exchange for a regularly-paid premium, the insurance scheme helps pay for a portion (or all, depending on the case) of the remaining housing loan balance.
In 2021, the government announced that a reduction of the premium required for the Home Protection Scheme would be enacted. Proper management of the Home Protection (HP) Fund, which members pay into, has allowed the CPF Board to enact a reduction in premiums due to better investments and lower payouts. Naturally, a large number of homeowners would be curious about what this would mean for them. This is what we will cover in this article.
Who qualifies for the reduction? How will I know if I qualify?
You may use the CPF Board’s online calculator to estimate your premiums based on various factors.
Existing homeowners, as well as homeowners who join the Home Protection Scheme, will be able to enjoy reduced premiums beginning on 1 July 2021. This will also apply to any existing members who need to renew their Home Protection Scheme covers (e.g. when you pay your premium for the next year, or when the loan term or balance amount has been adjusted) or for Single Premium Home Protection Scheme members who have been shifted to the Annual Premium Home Protection Scheme.
These reduced rates will be applied automatically for those who qualify for it (some half a million existing homeowners, not including new homeowners to come); no forms or applications are needed. As long as members are enrolled in the scheme, the calculations for reduced rates are taken care of automatically and simply reflected on the certificate provided to you when your cover is issued, as well as on your annual statements.
For existing members of the Home Protection Scheme who qualify for the reduction, the reduction in price will be reflected the next time a notice is sent about paying for their next premium after July 1, 2021 onwards as long as the reduction is above $5. It will not be mentioned if the reduction is under $5, but members may check the reduction via myCPF online using SingPass to access the platform and checking under Transaction History to view how much has been withdrawn from their CPF accounts.
New homeowners with HPS covers that start on or after 1 July 2021 will also qualify for the reduced rates.
For Single Premium Home Protection Scheme members, you may be shifted to Annual Premium Home Protection Scheme due to a variety of reasons. One of them may be that your Single Premium Home Protection Scheme (which covers you until age 55 or 60) has ended but you still have outstanding loan amounts. Another reason may be that your loan terms or amount has changed and thus warrants a shift into the Annual Premium Home Protection Scheme. If the shift – and therefore the issuance of the new cover – happens after 1 July 2021, you will also qualify for the new reduced premiums.
Do note that not everyone will qualify for a reduction. Specifically, those who are already paying competitive rates as ascertained by auditing actuaries will not be eligible for further reductions so as not to impact the fund and other members. These decisions are made based on member information, including their demographica data (age, sex, etc.) and loan data (loan term, balance amount, prior claim experience, etc.).
Additionally, those who have fully paid their premiums (90% of your cover) will also not qualify for reductions as there are no more premiums to pay.
How much is reduced?
Premiums will be reduced by around 10% from what it was before. The CPF Board engages independent actuaries to audit and review the Home Protection Fund’s transactions and investments, and they are the ones who help determine these updated rates based on their opinions. These rates, although reduced and beneficial to members, will still allow the Home Protection Fund to maintain long-term investment health.
Who do I talk to if I need more information?
You can reach out to the CPF Board via a variety of ways.
The first would be to make an appointment for them to call you via this form. This programme, called Callback@CPF, was created to reduce long wait times on the CPF hotline. Once you fill out the form and note the day you wish the receive the call, they will simply call you on the day of.
A second option would be to write in to them via their online form. This is useful when you have documentation you wish to attach.
Thirdly, you can also visit any one of their five branches across Singapore.
When it comes to housing, it is a big milestone in life. Should you be concerned on mortgage coverage or need advice in financial planning pertaining to mortgage, housing or just advice for the next phase in life, simply get in touch by filling up the form below and our financial advisor will get in touch with you soonest.