Types of Mortgage Protection Insurance in Singapore
Wondering how mortgage protection insurance works and which product suits you best? This article will help you understand the type of cheap insurance plan for your mortgage loan to provide your family with a peace of mind.
What is Mortgage Protection Insurance?
Mortgage Protection Insurance is a type of insurance policy that protects the lender from the borrower’s Death. This means, by buying a mortgage protection insurance, it covers the outstanding housing loan amount you owe and ensure your family continues to have a roof over their head when you die. Moreover, just like a typical life insurance, you may be able to add riders such as disability and critical illness to your plan.
Here are 3 types of Mortgage insurance Singaporeans will come across to protect their home loan.
1. Home Protection Scheme (HPS)
The Home Protection Scheme (HPS) is a mortgage reducing insurance that insures CPF members and their families against losing their homes in the event of Death, Terminal Illness and Total and Permanent Disabilities (TPD). Administered by CPF Board
What does HPS do?
- Insure members up till age 65/ when loan amount is fully paid for (whichever is earlier)
- Monthly premium payable via CPF Ordinary Account (OA).
- Property eligible for purchase of HPS includes: HDB, Housing and Urban Development Corporation (HUDC) before 1st November 1998.
- Optional if you prefer to pay premium via cash.
- Coverage amount will decrease over time
- No nomination as HPS is meant to cover for housing loan only.
- Joint life coverage
2. Mortgage Reducing Term Assurance
Mortgage Reducing Term Assurance (MRTA) is an insurance plan that covers for policyholder in the event of Death, Terminal Illness and Total and Permanent Disabilities (TPD), theres also an optional Critical illness rider (CI) for most policies that you can add on to enhance your coverage. The sole purpose of a MRTA is to protect your housing loan. It is administered by private insurance companies.
What does MRTA do?
- Insured members for a maximum of 35 years
- MRTA has coverage amount that is equivalent to your loan amount and will gradually decrease over the years
- Options to add on critical illness coverage or premium waiver rider upon Critical illness diagnosis
- Premium payable by cash only
- Suitable for private property owner and HDB owner who wants to pay cash for their insurance
- Optional Joint life coverage
3. Level Term Insurance
Level Term Insurance is an insurance plan that covers for policyholder in the event of Death, Terminal Illness and Total and Permanent Disabilities (TPD). There are five types of term insurance to choose from. They are Increasing, Level, Decreasing, Convertible and Yearly Renewable Term, each catering to people of different needs. The purpose of buying a level term plan varies, from getting it as a life insurance protection to even mortgage protection.
What Does Level Term Insurance Do?
- Options to choose coverage years till age 99
- Coverage does not decrease over the years and can be used for multipurpose such as using it for future property purchase or even family expense coverage
- Options for more riders add on like Early/Advance Critical Illness coverage, CI premium waiver and more (varies accordingly from each insurer)
- Premium is only payable via cash
- Suitable for private property owner and HDB owners who wish to pay their mortgage insurance using cash
- Able to make nomination to a beneficiary
- Joint life option for some insurers
HPS, MRTA, Level Term in a nutshell
In conclusion, HPS, MRTA and Level Term insurance can be used to protect your home loan should anything unfortunate befalls. Let us help you compare the right type of coverage across 15 insurance companies by filling the form below