Home Protection Scheme: Why cover starts upon collection of keys

We thank Mr Wilfred Ling for his feedback ("Home Protection Scheme: Start coverage once payment is made"; Oct 8).

The Home Protection Scheme (HPS) is a mortgage-reducing insurance administered by the Central Provident Fund Board that aims to help CPF members settle their outstanding housing loans for HDB flats in the event of death or permanent incapacity.

HPS cover will commence when a member has become the legal owner of his HDB flat upon collection of the keys, and this is about the same time as the commencement of his housing loan.

At this point, flat buyers would have finalised the housing loan quantum, loan repayment period and share of repayment among the co-owners.

The HPS sum assured and coverage period can then be determined based on these parameters. This helps to ensure that members have the appropriate level of financial protection and do not pay excessive premiums using their CPF savings.

Members looking for earlier financial protection can consider alternative private mortgage or term insurance policies.

A forfeiture of 5 per cent of the price of the flat will apply when new flat buyers cancel their application after signing the Agreement for Lease. This is to deter frivolous applications and to protect the interests of serious buyers.

Nonetheless, the HDB is mindful that there could be situations that merit special consideration.

The HDB will look into the circumstances of each case and consider the best way to help buyers, including waiving the forfeiture for those facing extenuating circumstances.

We will take Mr Ling's feedback into consideration in future reviews of the HPS.

Irene Kang (Ms)

Director of Communications

Central Provident Fund Board

Loh Swee Heng

Director (Sales)

Housing & Development Board

This article was first published on Oct 16, 2014.
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