Not sure if mortgage insurance is really needed in Singapore? You’re not alone. With so many rules around HDB loans, CPF, and bank mortgages, it gets confusing fast.
In this guide, we’ll break down when mortgage insurance is required, when it’s optional, and whether it’s actually worth it — all in simple terms.
Let’s clear it up
What Happens If You Don’t Have Mortgage Insurance?
It’s a question many Singapore home buyers quietly wonder about — “If something happens to me, what happens to my mortgage?”
Let’s be real: taking on a home loan in Singapore is one of the biggest financial commitments you’ll ever make. Whether you’re getting an HDB loan or financing a private property, the loan doesn’t magically go away if something happens to you.
That’s where mortgage insurance in Singapore comes in — not as a nice-to-have, but as a form of financial protection for your loved ones.
If you skip it, here’s what’s really at stake.
Why your home loan doesn’t disappear when you die
Here’s the hard truth: your mortgage survives you.
If you’re the sole owner of the property and pass away unexpectedly, the outstanding mortgage loan becomes a liability for your estate. This means your spouse, children, or surviving family members may have to either:
- Pay off the remaining loan themselves
- Sell the property to clear the debt
- Or risk foreclosure if they can’t do either
This is especially critical if you took a bank loan without mortgage insurance coverage — because unlike HDB’s HPS (Home Protection Scheme), private lenders won’t automatically insure you unless you buy separate coverage.
Pro tip: If you’re unsure how much of your home loan is left, use a mortgage loan repayment calculator to check your current balance and evaluate the risk gap.
What really happens to your HDB or condo without coverage
Let’s say you’re an HDB flat owner using CPF. You might already be covered under the HDB Home Protection Scheme (HPS) — but many people don’t even realise they can opt out, or never check if they’re actually insured.
Now imagine you’ve opted out of HPS, or you’re on a bank loan for an HDB resale flat. If something happens to you and you don’t have mortgage insurance, your co-owner or family might:
- Lose access to the property unless they take over the full loan
- Need to use their CPF or savings to pay it off quickly
- Face stress managing loan repayments on one income
Even if you’re buying a condo with a bank loan, this risk still applies. Private properties have no automatic protection — it’s fully up to you.
Common myths about “the bank will take your house”
A lot of Singaporeans believe that if they die, “the bank will just take back the house lah.” That’s not entirely true.
Banks aren’t property managers. They’re lenders. They want their money — not your house. If your family can’t service the mortgage, the bank will force a sale of the property, often below market value, just to recover the outstanding balance.
That means your loved ones could:
- Lose the home
- Walk away with little or no equity
- Or still owe money if the sale value doesn’t cover the loan
Don’t leave that to chance. Mortgage insurance — whether it’s through HPS or a private mortgage plan in Singapore — exists to prevent exactly this situation.
Is Mortgage Insurance Required for HDB Buyers in 2025?
If you’re planning to buy an HDB flat using your CPF Ordinary Account (CPF-OA) to pay the monthly loan, you’ve likely come across something called the Home Protection Scheme (HPS). It’s not just another acronym to gloss over — it’s actually a form of mortgage insurance specific to HDB buyers.
But is it compulsory in 2025? Can you opt out? And what does it even cover?
Let’s break it down clearly.
When HPS is compulsory and how CPF pays the premiums
As of 2025, HPS is compulsory if you meet these conditions:
- You’re using CPF savings to pay your HDB loan
- Your flat is either new or resale (doesn’t matter)
- You’re not already covered under an approved private mortgage insurance policy
HPS is managed by the CPF Board, and premiums are automatically deducted from your CPF-OA. You don’t need to apply for it separately unless you’re seeking an exemption (more on that below).
Important: You’re required to maintain your HPS coverage until the full repayment of the loan, or until you turn 65 years old, whichever comes first.
If you stop paying premiums (e.g. due to CPF depletion), your coverage may lapse — leaving your family unprotected.
What HPS covers in 2025 — and what it doesn’t
Think of HPS as a basic safety net. It’s designed to pay off the outstanding HDB loan if the insured person passes away or becomes permanently incapacitated.
Here’s a quick breakdown of HPS coverage vs exclusions as of July 2025:
What HPS Covers vs What It Doesn’t (2025)
| HPS Coverage | Not Covered by HPS |
|---|---|
| Death | Critical illness (e.g. cancer, stroke) |
| Total Permanent Disability (TPD) | Terminal illness not classified as TPD |
| Covers loan balance up to insured percentage | Does not protect private property or bank loans |
| Applies to HDB flat owners using CPF | Coverage lapses if CPF funds are insufficient |
If you’re insured under HPS, the CPF Board will pay off your outstanding HDB mortgage upon claim approval, based on the percentage you’re insured for (e.g. 50% if shared with co-owner).
But if you’re looking for coverage for critical illness or want to insure a private property loan, you’ll need to consider private mortgage insurance in Singapore instead.
When you can opt out of HPS — and whether you should
Yes, you can opt out of HPS — but only if you have a comparable private insurance plan that meets CPF’s exemption criteria. This usually includes:
- Mortgage-reducing term assurance (MRTA)
- Level-term life insurance with sufficient sum assured
- Coverage for death and TPD, up to your outstanding loan amount
You’ll need to submit an HPS exemption application via CPF’s website, along with documents from your insurer. CPF reviews each case, and may reject it if coverage is deemed insufficient.
But here’s the catch:
Private insurance may cost more (especially with riders), and you’ll have to manage renewals and payments yourself. If your health worsens or you miss a premium, you risk losing coverage altogether.
Expert tip: Unless you already own a solid term policy or prefer more flexible coverage, sticking with HPS is the most fuss-free way to stay protected for your HDB home loan.
Is Mortgage Insurance Necessary for Bank Loans or Private Property?
If you’re buying a private property — like a condo or landed home — or even an Executive Condominium (EC) with a bank loan in Singapore, the rules are very different from HDB financing.
There’s no mandatory mortgage insurance… but that doesn’t mean you should automatically skip it.
Let’s unpack what banks require, why many private buyers still go for insurance, and who’s most at risk without it.
What banks require vs what’s legally optional in 2025
As of July 2025, Singapore banks do not legally require you to take up mortgage insurance when applying for a home loan.
That said, some banks (like DBS, UOB, or OCBC) may recommend or bundle insurance products when you take up a bank mortgage, especially for high loan-to-value (LTV) ratios or longer tenures.
But the key thing is this:
Bank loans in Singapore are not automatically insured. If anything happens to the borrower — death or permanent disability — the outstanding loan still needs to be paid by the co-borrower, spouse, or estate.
So even though it’s optional, mortgage insurance acts like a safety net — and many choose to buy it for peace of mind.
Why some private home buyers still buy mortgage insurance
Even though mortgage insurance isn’t compulsory, many private property buyers in Singapore still opt for it — and here’s why:
- It protects your family from having to take over a large loan if something happens to you
- It ensures your home stays with your loved ones, not sold off to repay the bank
- It’s especially helpful for buyers with young children, non-working spouses, or no other financial backup
Common types of private mortgage insurance include:
- Mortgage Reducing Term Assurance (MRTA) – Coverage decreases over time, matching your loan balance
- Level Term Plans – Flat sum assured throughout the term (can double as life coverage)
- Riders for critical illness or terminal illness — useful if you’re the sole breadwinner
Want to see how much coverage you’d actually need? Try a mortgage loan repayment calculator to estimate your balance and match it with a policy.
Special scenarios: ECs, joint ownership, high loan amounts
There are some cases where not getting mortgage insurance could be risky, even if it’s not required by the bank.
Let’s look at a few examples:
✅ Executive Condo (EC) Buyers
If you’re financing an EC with a bank loan, you won’t be covered by HPS like with HDB. But your monthly payments may still stretch your CPF and income — especially in dual-income households. If one party passes away, the other must take over 100% of the loan.
✅ Joint Borrowers (Couples or Siblings)
Even if you’re splitting a home loan in Singapore 50/50, one party passing away can push the other into financial strain. Mortgage insurance ensures the remaining co-owner isn’t forced to sell the property just to clear the debt.
✅ High Loan Amounts or Long Tenures
Buying a $1.5M condo with a 30-year mortgage? Even a small premium for term coverage could protect your family from having to cough up hundreds of thousands unexpectedly.
Expert tip: For bank-financed homes, consider at least one party getting covered under a private mortgage insurance policy — especially if one owner is earning significantly more or managing the bulk of the loan.
Is Your Life Insurance Really Enough to Protect Your Home Loan?
It’s a fair question — and one many Singaporeans ask.
If you’ve already got life insurance or a term plan, do you really need separate mortgage insurance?
Short answer: Maybe. But don’t assume it automatically covers everything.
Let’s break down why mortgage-specific coverage exists, how it compares to your regular term plan, and how to spot any gaps before it’s too late.
Term plans vs mortgage-specific insurance — key differences
Term life insurance pays out a fixed lump sum if you pass away during the policy term. You decide the coverage amount, and your family can use it however they want — including paying off a home loan.
Mortgage insurance (like HPS or MRTA), on the other hand, is tied directly to your outstanding loan. It’s purpose-built to clear your housing debt so your loved ones can keep the home — nothing more, nothing less.
Key difference?
Term insurance gives flexibility. Mortgage insurance gives certainty — the home is covered, no matter what your family chooses to do with the payout.
When existing life insurance may not cover your mortgage
This is where many people unknowingly fall short. Your life insurance coverage might look like “a lot” — say $300,000 — but is that really enough?
Let’s say you have:
- A $500,000 condo loan,
- A $300,000 life policy,
- And a spouse plus two kids to support.
If you pass away, your family now has to:
- Pay off the remaining mortgage,
- Cover living expenses, childcare, maybe even tuition
- And handle funeral or legal costs
Suddenly, that payout doesn’t stretch very far.
Expert tip: If your life insurance was bought years ago and hasn’t been reviewed since your property purchase, you’re likely underinsured — and your home loan may be at risk.
How to check for underinsurance without guessing
- Calculate your outstanding home loan – Use a mortgage loan repayment calculator to get an estimate.
- List all your existing insurance payouts – Include life, term, and any mortgage-specific plans.
- Subtract your liabilities from your coverage – If there’s a shortfall, your family would need to cover the rest.
Quick Example Table: Checking If You're Underinsured
| HPS Coverage | Not Covered by HPS |
|---|---|
| Death | Critical illness (e.g. cancer, stroke) |
| Total Permanent Disability (TPD) | Terminal illness not classified as TPD |
| Covers loan balance up to insured percentage | Does not protect private property or bank loans |
| Applies to HDB flat owners using CPF | Coverage lapses if CPF funds are insufficient |
In this case, a top-up via mortgage insurance in Singapore could close the gap and give your family full housing security.
Can You Skip It — Or Will You Regret It Later?
Let’s be honest — with rising costs in Singapore, skipping mortgage insurance might sound like a tempting way to save money.
After all, it’s not always compulsory (especially if you’re on a bank loan), and no one really thinks something bad will happen… until it does.
But here’s the thing: not having coverage doesn’t just affect you — it impacts your family when they’re most vulnerable. Let’s walk through what really happens if things go sideways.
What happens to your family if no insurance payout comes
If you pass away or become permanently disabled and don’t have mortgage insurance in Singapore, your family must either:
- Take over your monthly home loan repayments
- Sell the flat or property to settle the mortgage
- Or risk the bank forcing a foreclosure sale if the debt can’t be cleared
For HDB flats, this is especially risky if you’ve opted out of the Home Protection Scheme (HPS) without arranging for private coverage.
And for private property owners with large bank loans, the burden can fall entirely on your spouse or children — even if they weren’t co-borrowers.
Bottom line? No insurance = full responsibility on your loved ones.
Claim rejections: HPS exclusions, private policy lapses
Even if you have insurance, there are still risks if you don’t understand the policy terms clearly.
Let’s break it down:
🔍 HPS Claim Rejection Scenarios:
- Your CPF OA didn’t have enough funds to pay the HPS premium
- You had undisclosed health conditions at the time of application
- The coverage expired after age 65 and wasn’t renewed or extended
🔍 Private Mortgage Insurance Rejections:
- Missed or late premium payments leading to policy lapse
- Bought a cheaper plan that only covers death — not disability
- Incomplete or inaccurate disclosure during application
This is why it’s so important to check if your HDB loan, bank mortgage, or even executive condo loan is actually protected right now — not just assumed to be.
CPF refunds, probate delays, and out-of-pocket settlements
Here’s something many buyers don’t realise:
If you pass away without insurance, and you’ve used CPF to pay for your home loan, your CPF savings must be refunded back to your CPF account before the property can be transferred or sold.
This creates 3 key issues:
- Your surviving family may not have enough cash to cover the refund
- They may need to sell the flat — but that takes time
- The legal process (probate) can take months, during which the loan still accumulates interest
And all this is happening during a time of grief.
Expert tip: Mortgage insurance gives your loved ones immediate financial support, helping them avoid these complications. It’s not just about protection — it’s about peace of mind and dignity.
Profiles of Singaporeans Who Shouldn’t Skip Mortgage Insurance
While it’s not always mandatory, mortgage insurance in Singapore is critical for certain types of homeowners — especially if you’ve got dependents or a long loan tenure.
Here are three common profiles who should definitely think twice before skipping coverage:
Young HDB couples using CPF with long loan tenures
This is one of the most at-risk groups.
If you and your spouse are in your 20s or 30s, buying your first HDB flat and using CPF to pay the mortgage, you’re likely:
- Taking a 25- to 30-year HDB loan
- Starting a family (or planning to)
- Relying on dual income to afford monthly payments
Even if you’re both in good health, a lot can happen over the decades.
The Home Protection Scheme (HPS) protects your share of the loan — so if one partner passes away, the CPF Board steps in to pay off that portion. Without it, the surviving spouse could be left handling the full loan alone.
💡 Tip: If you’re unsure about your current coverage, you can check your status via MyCPF or use a mortgage loan repayment calculator to estimate how much is still unpaid — and whether you’re protected.
Sole breadwinners or single owners with dependents
If you’re the only one paying the home loan, and you’ve got children, elderly parents, or a non-working spouse, mortgage insurance is a must.
Without it, your family could lose not just your income, but also their home.
This applies to:
- Single-parent homeowners
- Divorcees keeping the flat after refinancing
- Elder siblings buying HDB for younger dependents
Even if you’re paying your HDB or bank loan fully in cash, it doesn’t mean you’re protected — HPS doesn’t apply if CPF isn’t used, and bank loans never come with automatic insurance.
Private property buyers with no other financial backup
If you’ve just stretched your budget to buy a condo or private property in Singapore — especially one above $1 million — skipping mortgage insurance could be a major risk.
This applies if:
- You’ve taken a long-tenure bank loan for a condo
- You’re relying on future income to service the loan
- You don’t have any separate life or term insurance coverage
A single health emergency or unexpected death could force your family to sell the property to clear the loan. And with bank mortgage rates in Singapore fluctuating, the pressure only builds over time.
💡 In these cases, a simple mortgage-reducing term plan or level term policy can bridge the gap — and it doesn’t need to be expensive.
Final Answer — Is It Necessary for You?
So… is mortgage insurance in Singapore truly necessary?
Here’s the honest answer:
✅ For some people, absolutely.
🤔 For others, it depends.
❌ And yes — a small group can probably skip it safely.
So, is mortgage insurance necessary in Singapore? If you’re using CPF to pay for your HDB loan, it’s compulsory under the Home Protection Scheme (HPS).
But even if you’re on a bank loan or buying private property, mortgage insurance can be a smart safety net — especially if you have dependents, joint loans, or minimal life coverage. It’s not just about rules — it’s about protecting your home, your family, and your peace of mind.
