Debated in Parliament on 13 Apr 2015.
Er Dr Lee Bee Wah asked the Minister for National Development (a) how many HDB flat owners have been allowed to opt out of the Home Protection Scheme (HPS); (b) whether the Ministry will make it compulsory for flat buyers to sign up for HPS; (c) whether flat owners who are not covered by the HPS are allowed to sign up for HPS if they are still servicing a housing loan; and (d) whether HDB will make another effort to emphasise the importance of HPS to all flat owners who are still paying for their housing loan.
The Minister of State for National Development (Mr Desmond Lee) (for the Minister for National Development): Madam, HDB flat owners who use CPF to service their housing loans must take up HPS. They are only allowed to opt out of the HPS if they have taken up a similar mortgage reducing insurance (MRI). Forty-three thousand six hundred and ten flat owners have been allowed to opt out of HPS on this basis.
Flat owners who are not using their CPF to service their housing loans may have to set aside cash to pay for their HPS premiums, if they do not have enough in their CPF to do so. As their financial circumstances may vary, HPS is currently not compulsory for those who do not use CPF to service their housing loan. Nonetheless, they can sign up for HPS on an opt-in basis, subject to underwriting and health condition at the time of the application. One hundred and forty-two thousand three hundred and sixty-six such HDB flat owners have done so. We will need to carefully study whether to make it compulsory for all home buyers servicing a loan to take up HPS or similar MRI.
HDB actively encourages all HDB flat owners servicing a housing loan to take up HPS, as it ensures that surviving flat members are protected in the event of the death or incapacitation of the lessee. At the point of flat purchase, HDB will explain to flat buyers the benefits and the coverage of HPS. HPS booklets are also distributed to home buyers at HDB. We will continue to work with CPF Board to see how we can further improve coverage and awareness of the importance of HPS to flat owners who are still paying for their housing loan but who may not have HPS coverage.
Mdm Speaker, recently, when I attended the wake of a resident of mine who had passed away, I found out the flat is still not fully paid up and they have school-going-age children. When I asked the wife whether it was covered by HPS, she said, "No." That is why I am asking HDB, if they are still paying for the flat using CPF, can we make it compulsory for them to have HPS? The reason is that in order to get out, they may go and buy an equivalent insurance but, in subsequent years, they may not renew the
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insurance. I would like to ask the Minister of State to consider this.
Madam, certainly, we are looking at this area and will take on board the Member's suggestion.
Ms Lee Li Lian (Punggol East): Madam, I would like to find out what are the current efforts taken to remind home owners to make premium payments if they have failed to do so, before the policy is terminated.
Madam, HPS owners who do not have enough in their CPF Ordinary Account savings for HPS premium deductions are given a grace period of two months to make their premium payments. I believe that is where the Member is coming from. Any fresh Ordinary Account contributions received in these two months are reserved for HPS premiums to ensure that there is no lapse. During the two months' grace period, two notification letters – one in each month – will be sent to remind members to top up their Ordinary Accounts for HPS payments. If they do not pay their outstanding premiums within the two-month period, their HPS cover will lapse and a notification letter sent to inform them of this lapse in coverage and to alert them to the need to look into this. For members who are still using CPF to service their monthly instalments, the HPS coverage status will be indicated clearly in their annual CPF statements.
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