Did you know that you’re obliged to subscribe to certain home insurance if you’re using your CPF savings to pay for your housing loans?
Called the Home Protection Scheme (HPS), this home insurance helps protects CPF members and their families from the risk of losing their HDB flats in the event of death, terminal illness, or total permanent disability, before their housing loans are paid up.
Those not using CPF savings to pay for their housing loans can also apply for the insurance, which is something you might want to do now because…
HDB Flat Owners Will Pay 10% Less Home Insurance from 1 July
That’s right, over 540,000 HDB flat owners will pay around 10% less in premiums for the HPS from 1 July.
The CPF board announced yesterday (24 June) that it would be reducing premiums for the HPS because of “better-than-expected investment returns and claims experience”.
The last time such a reduction in premiums was made was in 2018. The CPF board said it “conducts periodic reviews to ensure that HPS premiums remain affordable”.
Reducing the premiums, it said, will help maintain its long-term sustainability.
$83.8 Million Paid Out in Claims in 2020
According to the CPF board, around 1,000 HDB homeowners using their CPF to pay for their housing loans pass away, or suffer a terminal illness or total permanent disability every year.
“To avoid a situation where they and their families lose their homes due to inability to afford the monthly mortgage, HPS protects CPF members and their families by paying up the outstanding loan,” it said.
In 2020 alone, S$83.8 million was paid out in claims to home owners who were insured under HPS.
To illustrate how much home owners would save, the board gave an example of a 36-year-old home owner with a S$200,000 housing loan from HDB for 30 years.
Instead of paying an annual premium of S$232.40, he will pay S$209.40 instead – equivalent to a 10% reduction – once the scheme kicks in on 1 July.
Think of all the bubble teas you could buy with that extra cash.
Existing Members Will Also Enjoy Reduced Premiums
Members who join the HPS scheme on or after 1 July 2021 will pay the reduced rates.
Existing members will also enjoy the reduced premiums when they pay their annual premium or adjust their HPS coverage on or after 1 July 2021.
Existing members will be notified of their new premium in the month that it is deducted.
And from next month, potential homebuyers can use the HPS calculator on the CPF website to estimate their new premiums.
For more information, head to the CPF website or contact the CPF Board here for enquiries.
Featured Image: happycreator / Shutterstock.com
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