The Home Protection Scheme – or HPS, for short – is an insurance scheme that aims to ensure that property mortgages are covered if the original owner of the property is unable to make those payments due to total permanent disability (TPD), terminal illness (TI), or death. In these cases, nonpayment of the mortgage may mean foreclosure of the property, which may cause other family members to lose their homes in the midst of dealing with something difficult. To prevent this from happening, the Home Protection Scheme insurance pays for the monthly house payments as long as you are enrolled in the program.
That being said, there are certain cases in which homeowners may desire exemptions from the Home Protection Scheme. So in which cases will you be able to get exemptions from the HPS program, and how can you go about applying for them?
In which cases can I apply for HPS exemption?
The short and long of it is that you can only get HPS exemptions if you do not need them. The first case is if you fully own your HDB flat property (legal ownership), and you have disbursed the housing loan for the property. The second would be if you have alternative insurance policies that offer the same benefit and cover the remainder of your housing loan in the stipulated cases of total permanent disability, terminal illness, or death. These usually fall under several insurance policy types, including whole life, term life, riders, endowments, and mortgage-reducing term assurance (MRTA/decreasing term rider) policies.
Specifically for MRTA policies, you must ensure that the rate of the policy is equivalent to or higher than the housing loan’s assumed mortgage rate. For concessionary HDB loans, the mortgage rate is assumed to be 3% and for market-rate HDB loans, the rate is assumed to be 4%. Bank loans will be assumed to have a 4% mortgage rate as well. These assumptions are based on prior rates and the economic environment and are set by the CPF Board.
You may want to speak to your financial advisor or insurance provider to fully understand what these policies cover; additionally, certain policies also do not qualify for exemptions, such as any policies that were pledged as collateral, those under Section 73 of the Conveyancing Law and Property Act (Cap 61), policies under irrevocable (cannot be withdrawn) nomination or trust arrangements, or policies that have loans attached to them. Non-life insurance policies (personal accident, business insurance, etc.) will also not be accepted, and neither will policies that are not priced in SGD or are from companies that are not licensed by the Monetary Authority of Singapore (MAS).
You can also receive an exemption if you are using a private insurance policy that you have used for a previous flat and applying it to your new property, as long as the covered sum under the policy is shown to be enough to cover the loan for the new property and the policy also covers you under TI, TPD, and death.
Partial exemption for a single owner does not exist; however, if you have co-owners and are applying for separate coverages under HPS, you may have partial coverage under one co-owner, and exemption from another owner as long as they fulfill the above conditions for exemption.
How do I apply for exemptions?
If exemptions are related to existing private insurances, you will need to apply for exemption through the insurer that covers you rather than through a government portal. Your provider will tell you what documents you will need to provide for this, but it will generally include items to do with the property, the loan (commencement date, total amount, loan and term balances, mortgage rate), and your information. Once the application has been submitted, it will be evaluated and you will then be informed of whether the exemption is approved within 5 working days.
You will need to enroll in the program first to ensure that you have coverage before submitting an application form for an exception to it. If this exemption request is received and granted within a month of the HPS cover approval and issue, then the full premium will be refunded. If it is not, a pro-rated refund will be provided instead based on the amount of time that has elapsed after issuance.
Exemptions to the exemption (when your exemption becomes invalid)
If you refinance your loan, the exemption becomes invalid – that is, you will be enrolled into the HPS again, as the conditions of your exemption have changed. You can apply for a new exemption through your insurer after you have completed the refinancing process and once the loan has been disbursed – in this case, your application will be reassessed as though it were new, and will once again be evaluated for appropriate coverage that is comparable to the HPS.
Additionally, if your private policy has been changed or discontinued your exemption will also be invalid. Your HPS cover will be issued automatically based on the amount you were previously insured for (as long as you are eligible for HPS), and the premium will be deducted from your OA as per usual.
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