Mortgage Insurance Policy Benefits | Why Should You Get Mortgage Insurance?

Insurance | Mortgage Insurance

If you are planning to buy an HDB flat in Singapore and are wondering whether to sign up for mortgage insurance then this is for you.  The Home Protection Scheme (HPS) is required for HDB buyers who use CPF funds to repay their home loans. In this blog, we tell you about mortgage insurance policy benefits You can apply to be exempted if you have one of the following policies:

• Life insurance in its entirety
• You have Life insurance for a set period of time
• Policies concerning endowments
• A life rider is a policy that is attached to a basic policy.
• Decreasing Term Rider (MRTA) / Mortgage Reducing Term Assurance (MRTA)
• MRTA, the last item on the list, is essentially mortgage insurance. That is, if you find a mortgage insurance policy that you believe is superior to the HPS, you are free to sign up for it and be exempt from the latter.

Mortgage Insurance Policy Benefits in Singapore:

Pay Lower Premiums

The HPS is not less expensive simply because it is a government-led initiative. If you do the math, you’ll find out that private mortgage insurance can be less expensive than the HPS. This is especially important if you’re buying a house with your spouse or a family member. The HPS will issue two policies rather than one joint policy. And you will have to pay your premiums separately. On the other hand, private mortgage insurers offer joint policies that are often cheaper overall than two HPS policies. They also provide discounts if you sign up as a couple.

Change of Plans? You get to Keep the Mortgage Insurance

If you decide to sell your current home and upgrade to a new one, whether HDB or private, you can easily transfer your mortgage insurance policy. The HPS, on the other hand, is terminated when your flat is sold or when your loan is fully repaid. When you sign up for a policy, your premiums may increase based on your age. As a result, you should purchase your insurance plan as soon as possible to lock in a lower price.

Get a Joint-Insurance Policy

There are many advantages to being insured jointly under one private mortgage insurance plan rather than separately under the Home Protection Scheme. This is especially beneficial if you and a co-purchaser buy a home together. If you have a joint mortgage insurance policy, your co-purchaser will automatically receive the policy proceeds if something unfortunate happens. These proceeds are typically paid out in cash in a lump sum. They are intended to be used to repay the mortgage. But you or your co-purchaser are free to decide how to use them. And you have the choice to put them towards more pressing needs. The HPS, on the other hand, will not allow you or your co-purchaser to see the money. It will be paid to the HDB directly. As a result, there is a lot less leeway.

No Need to Pay Premiums with CPF Funds

Every year, HDB deducts your HPS premiums from your CPF OA. Private mortgage insurance premiums can be paid in cash or by credit card. If you have a credit card that gives you points for paying your insurance premiums, that should be your preferred method of payment.

Get Add-ons to Increase Security 

Many private insurers provide additional riders that allow you to further protect yourself. For example, you may be given the option of adding a critical illness rider, having your premiums waived, or receiving coverage if you are laid off. Other riders might include medical expense coverage or personal injury protection. Because the HPS cannot be supplemented with riders, you must make do with the basic protection it provides.

Get Your Premiums Reimbursed

If you have not made any claims by the end of the policy term, some private plans will give you a refund or a discount on your premiums. The HPS offers no such advantages.

With so many benefits from private insurers,  it is a good idea to sign up for mortgage insurance. Mortgage Insurance policy benefits ensure that you and your family can have secured assets even when an unforeseen situation occurs. Read more about insurance policies in Singapore in our blog section!


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