By MoneyBees
See how much cover your home loan needs each year, how a reducing term policy and a level term policy track it, and what each costs over the loan from your own quotes. For HDB owners, see where CPF's Home Protection Scheme fits.
Ask the insurer for the cover schedule: worked at a rate below your loan rate, the cover falls faster than the loan.
Largest gap, reducing cover
$0
cover keeps up with the loan
Premiums, reducing vs level
$10,000 vs $17,500
over 25 years
Loan left half-way
$305,974
after 12 years
$500,000 at 3% over 25 years. A reducing policy worked at 3% keeps pace with your loan, so a claim clears it.
A level policy keeps the full $500,000 to the end, so once the loan is lower the rest goes to your family. On your quotes it costs $7,500 more in premiums.
For an HDB flat paid with CPF, the Home Protection Scheme is required unless CPF exempts you. It covers you to 65 or until the loan is paid, whichever is earlier.
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| Year | Age | Loan left | Reducing cover | Gap |
|---|---|---|---|---|
| 1 | 35 | $500,000 | $500,000 | - |
| 5 | 39 | $442,903 | $442,903 | - |
| 10 | 44 | $361,203 | $361,203 | - |
| 15 | 49 | $266,298 | $266,298 | - |
| 20 | 54 | $156,055 | $156,055 | - |
| 25 | 59 | $27,996 | $27,996 | - |
At the start of each policy year, with level cover staying at the full loan amount throughout; your insurer's own schedule is what binds.
A 35-year-old borrows S$500,000 at 4% over 25 years. A reducing policy whose schedule is worked at 2% falls faster than the loan. In year 15 the cover would be S$30,540 short of the loan left, the largest gap in the term.
With cover worked at 4% the same loan has no gap at all, while a level policy for S$500,000 covers the whole loan every year and leaves the difference to the family.
Life cover that pays off your home loan if you die, become terminally ill or are totally and permanently disabled. HDB owners paying with CPF are covered by CPF's Home Protection Scheme; other owners buy private cover such as mortgage reducing term assurance or a level term policy.
Yes, if you own an HDB flat and pay the monthly instalments with CPF savings, unless CPF exempts you. If you pay in cash, CPF strongly encourages it. HPS covers you to age 65 or until the loan is paid, whichever is earlier.
No. HPS does not cover private residential property, including executive condominiums and privatised HUDC flats. For those loans, cover is private insurance.
A reducing (decreasing) term policy's sum assured falls over the term and reaches zero at the end. A level term policy keeps the same sum assured throughout. With level cover, once the loan is lower the extra goes to your family. Compare the premiums on your own quotes.
Yes. Its sum assured falls on a schedule set when you buy it. If your loan's actual interest rate is higher than the rate that schedule assumes, the loan falls more slowly than the cover. Refinancing to a higher rate can have the same effect.
Yes. Whole life, term, endowment, life riders and mortgage reducing term policies can be used if together they cover the outstanding loan against death, terminal illness and total permanent disability until the loan ends or you turn 65. Apply through your insurer.
In full, into your Ordinary Account, if CPF receives the exemption application within one month of your HPS cover being issued. Otherwise the refund is pro-rated when the cover ends.
HPS cover ends at 65. CPF suggests private cover for any loan that will only be paid up after you turn 65.
These calculators provide general estimates for educational purposes only and are not personalised financial advice. Results may rely on rates and rules that change over time, so verify against official sources (IRAS, CPF Board, HDB, MAS) or consult a licensed financial adviser before making decisions.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).