Paper 2 · Financing
Home Protection Scheme (HPS) & HDB Fire Insurance Explained
Must-know for the exam
- The Home Protection Scheme (HPS) is mortgage-reducing term insurance run by the CPF Board that pays off the outstanding housing loan; HDB Fire Insurance protects the flat's HDB-built structure.
- HPS pays out on the insured owner's death, terminal illness or total permanent disability, settling the outstanding loan directly with HDB or the mortgagee up to the sum insured.
- HPS is compulsory when CPF savings pay the monthly instalments on an HDB flat, whether the loan is from HDB or a bank; paying wholly in cash makes it voluntary.
- HPS premiums are deducted annually from the CPF Ordinary Account, and cover ends at age 65, full repayment or sale of the flat, whichever comes first.
- Exemption from HPS must be applied for and granted by the CPF Board on the strength of adequate private insurance; owning some insurance does not exempt a member automatically.
- Co-owners each choose a share of HPS cover up to 100%, and the household's shares should total at least 100%; any uninsured portion remains owed by the survivor.
- HPS covers HDB flats only
Almost every HDB owner ends up holding two insurances, and almost every candidate mixes them up. The Home Protection Scheme (HPS) protects the loan; HDB Fire Insurance protects the flat's structure. Neither protects the owner's renovations, furniture or belongings. A salesperson who cannot separate the three is one careless sentence away from a client believing their $60,000 kitchen is insured when it is not.
The two schemes side by side
| Home Protection Scheme (HPS) | HDB Fire Insurance | |
|---|---|---|
| Run by | CPF Board | HDB, through its appointed insurer |
| What it protects | The outstanding housing loan | The structure — internal walls, floors, ceilings, doors, window frames, wiring and sanitary fittings built and provided by HDB |
| Insured event | The insured owner's death, terminal illness or total permanent disability | Fire and the other perils named in the policy |
| Compulsory when | CPF savings are used to pay the monthly instalments on an HDB flat |
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Common questions
- Is the Home Protection Scheme compulsory?
- Yes, for a CPF member who uses CPF savings to pay the monthly housing instalments on an HDB flat. It applies whether the loan came from HDB or a bank, because the trigger is the use of CPF rather than the lender. If the instalments are paid wholly in cash it is voluntary, though the CPF Board strongly encourages it. Confirm the current conditions with the CPF Board.
- Does the Home Protection Scheme cover a condominium or an executive condominium?
- No. HPS covers HDB flats only. Private residential property, executive condominiums and privatised HUDC flats fall outside the scheme however much CPF the owner uses to service the loan, so those owners need commercial mortgage-reducing or life insurance instead.
- When does HPS cover end?
- At age 65, when the housing loan is fully repaid, or when the flat is sold — whichever happens first. Where the loan still has years to run after the owner turns 65, that remaining period is not protected by HPS and the owner should arrange private cover for it.
- What does HDB Fire Insurance actually cover?
- The cost of reinstating the internal structure, fixtures and areas built and provided by HDB — internal walls, floors, ceilings, doors, window frames, wiring and sanitary fittings. It does not cover renovations the owner added, nor furniture, appliances or personal belongings; those need a separate home contents policy. It is compulsory while an HDB housing loan is outstanding and is bought as a 5-year policy from HDB's appointed insurer.
- What is the difference between HPS and HDB Fire Insurance?
- HPS insures the owner and protects the loan: on death, terminal illness or total permanent disability it pays the outstanding housing loan to HDB or the mortgagee. HDB Fire Insurance insures the flat's HDB-built structure against fire and the other perils named in the policy. One would never pay out on the other's event, and neither covers the owner's renovations or contents.
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