An Overall Overview of Mortgage insurance

A home is not a place where you only find a roof over your head for a living, however, it is a place where you create precious memories with your family and live every moment of your life.

We humans think that non-living things do not have any emotions, then also we devote time, money, and effort to own a (non-living) space, whom we call our home. We put in so much of our resources to buy a home for ourselves because it gives us a sense of belonging.

Therefore, finding a roof over your head is a necessity but owning that roof is a satisfaction. 

After we buy our home, by spending a sizeable chunk of our life earnings and taking a loan, a lot can happen during the years before our home loan gets completely repaid.

So, let us not sit dependent on our fates, we should get prepared for every kind of situation before it hits us because when you are unprepared and somethings hits you, its pain really hits harder, however, when you are prepared, the pain of the hit will be negligible because you were ready to absorb it.

Someone has said it well,

"Precaution is better than Cure"

The solution to this unforeseen problem is MORTGAGE INSURANCE. So, let us understand what this Mortgage Insurance is, how it works, and how it is the solution to this problem.

What is Mortgage Insurance?

In formal wording of economics, we can define mortgage insurance as "Mortgage insurance offers a lump sum amount of money that is used to pay off the outstanding home loan if any mishap happening takes place to the homeowner like death, terminal illness, or permanent disability.

In simple words, mortgage insurance is a financial coverage that covers up the remaining amount of the mortgage loan to be repaid in case of any mishappens, which leaves the person in such a position where he or she cannot work to earn, takes place with the one owning the loan of the home.

Benefits of Mortgage Insurance

  • It is designed to protect you and your family from losing your home, which cost you your life savings, due to some misfortune.
  • As your home is taken as collateral by the lender lending you the mortgage loan, he or she has the full right to sell your home and get his or her money if you are unable to repay the amount.
  • In the duration of the repayment of the loan, if any mishap takes place, in these situations, mortgage insurance will stand as a strong pillar by your side.
  • If the misfortune is at the extreme end, and unfortunately the homeowner dies, then the family can claim to the insurer to pay back their mortgage loan.
  • Having the insurance keeps the burden away, due to the mishap, of looking into the loan payouts on the shoulder of the insurer and not on the family, which will enable the family to live in their home without stressing about the repayment of the considerable amount of the loan.
  • The insurance will ensure that if something unfortunate happens to the homeowner and also to his or her spouse, then their children be safe and secure in their home.
  • If you are taking property together with someone as a share, then you both should opt for the mortgage insurance because this will save you both from losing the home if one of you dies or is unable to work for the earnings.

Relation Between Mortgage Insurance and Home Protection Scheme

  • Home Protection Scheme or commonly known as HPS is similar to mortgage insurance.
  • HPS is a government-led initiative for the people buying HDB.
  • HPS is by default included in the package where the person purchases HDB flats and uses his or her CPF savings for the monthly mortgage payments.
  • The person buying the HDB flat automatically signs up for HPS.
  • If the homeowner, before the age of 65, dies or gets permanently disabled, then the CPF board will pay out the outstanding amount of his or her mortgage home loan.
  • Joining the HPS is not compulsory for those who are not using their CPF savings to repay home loans.
  • For all the private property and Executive Condominium buyers, HPS is not compulsory, and for mortgage insurance, they have to sign up for a private policy.

Does the homeowner protected under the Home Protection Scheme still need Mortgage Insurance?

HPS is compulsory for the ones paying their mortgage loan for their HDB flat from their CPF savings, but they can be exempted from this if they have any one of the following policies:

  1. Life riders attached to their basic policy
  2. Endowment policies
  3. Whole life insurance
  4. Mortgage Reducing Term Assurance (MRTA)
  5. Term life insurance

MRTA is nothing but Mortgage Insurance. So, you find a good deal on any mortgage insurance other than HPS, then you can switch to that mortgage insurance. You will generally find the best deal for mortgage insurance than HPS when you will buy a flat together with your spouse or any family member because HPS will issue two policies for this, instead of one joint policy, whereas private insurers provide joint policies, which will be cheaper from overall combined charges of both of you in HPS policies.

Different things you can try with Mortgage Insurance

  • You can take a joint insurance plan if you are purchasing together with someone
  • If you take private mortgage insurance, you both will get some advantages, unlike getting separate policies under HPS.
  • A joint mortgage insurance scheme automatically offers the proceeds of the policy you passed to your co-purchaser.
  • The proceeds are generally given in cash.
  • The proceeds are paid to you or the remaining spouse for repayment of the loan, but you or the remaining spouse can decide how and where to invest them.
  • While in HPS, you both won't get the money in your hands, it will be directly transferred to HDB.
  • Even if you upgrade to a new property, you can still continue with your mortgage insurance
  • If you decide to sell your current home, then you can upgrade your mortgage insurance to your new property.
  • Your premium for mortgage insurance might get refunded
  • Some of the private mortgage insurance plans refund or give discounts on the premiums which have not made any claims by the end of the policy term.
  • HPS does not have this offer included in the scheme.


Everything in this world is unpredictable, we cannot even predict what will happen to us next, that is the reason why we have always been taught to focus on our present and give our best to it.


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