Mortgage Insurance Singapore

Home is the place where we feel secure and safe. We travel to work every day to earn a living and spend a lot of time in our office. However, we still long to come home at the end of the day so that we can relax and spend time with our loved ones. Even when we come back from vacations, we enjoy the feeling of being back home. Thus, we need to protect our home and safeguard it against all the uncertainties of life. We spend years of savings to make a down payment and purchase the house of our dreams. However, if we fail to pay the mortgage EMIs, our house might be taken away from us and so we need to opt for a mortgage insurance policy that can take care of the mortgage payments in case something happens to us.

What is Mortgage Insurance?

Mortgage Insurance is a type of insurance policy that can help people deal with the financial burden of paying their mortgage EMIs, in case they lose their monthly income due to an unforeseen event. In Singapore, Mortgage Insurance is also referred to as Mortgage Reduced Term Assurance (MRTA) as most of the insurers offers reducing term mortgage insurance policies. These policies offer the policyholders (or their family members in case of their death), a lump sum payment that can help them to pay off their mortgage loan EMIs. Thus, the policyholders can avoid being a mortgage loan defaulter and in the process, they can protect their homes.

Why do you need Mortgage Insurance?

Life is very uncertain and we never know what future will be like. We can certainly try to bring a sense of stability in our lives through proper planning. However, even that cannot help us to avoid uncertain and unfortunate events like accidents, diseases, death etc. Such events bring with them, a lot of financial burdens and might also render us unable to make our mortgage loan payments. Hence, we should opt for a comprehensive and affordable Mortgage Insurance policy which can help us to keep paying our mortgage loan EMIs so that we always have a roof over our head. Mortgage Insurance is the ideal tool for those who want to safeguard their home and make sure that their loved ones continue to have a shelter.

Types of Mortgage Insurance in Singapore

In Singapore, the Central Provident Fund (CPF) board offers Mortgage Insurance to those who purchase house through the Home Protection Scheme (HPS). Apart from that, there are many private lenders such as banks and other financial institutions that offer this insurance products to people in Singapore. The types of Mortgage Insurance offered by the private insurers in the country are as follows:

  1. Single Premium Insurance – In this type of Mortgage Insurance, the policyholders are required to pay the premium of the policy as a lump sum amount. They do not have to make monthly or yearly payments. The sum assured depends on the premium amount paid and other factors.
  2. Borrower-Paid Insurance – This is a very straightforward type of Mortgage Insurance in which the borrowers, pay the premium for the mortgage insurance along with their mortgage loan EMIs to the lenders who have offered them their mortgage loans. When the policyholders are unable to make payments for their mortgage loan, the premiums paid towards the mortgage insurance is utilized to pay off the loan.
  3. Lender-Paid Insurance – In this type of Mortgage Insurance, the person who has a mortgage loan is offered a Mortgage Insurance from a 3rd party bank or financial institution. The policyholder makes premium payments to the 3rd party insurer based on the terms and conditions of the policy. When the policyholder is unable to pay mortgage loan EMIs and makes a claim, the insurer offers a lump sum payment (or monthly payments) to help the policyholder pay off the mortgage loan EMIs. This is currently the most popular type of Mortgage Insurance in Singapore.

Features and Benefits of Mortgage Insurance

The common features and benefits of Mortgage Insurance in Singapore are as follows:

  • It offers a lump sum payment for paying off mortgage loan in case of total or permanent disability, or death (paid to family members).
  • It comes with affordable and flexible premiums.
  • It comes with a wide range of coverages.
  • It offers people with the flexibility of enhancing their coverage by opting for additional riders.
  • It comes with flexible interest rates.

List of Agencies/Companies providing Mortgage Insurance

Here is a list of agencies/companies that provide Mortgage Insurance in Singapore:

  • AIA Insurance
  • NTUC Insurance
  • Great Eastern
  • Prudential
  • Tokio Marine
  • HSBC
  • OCBC Singapore

FAQs – Mortgage Insurance

  1. What is the minimum age required to apply for Mortgage Insurance?
  2. The minimum required age to apply for Mortgage Insurance differs for different insurers. Usually, the applicant is required to be minimum 20 years of age. You can contact the individual insurer if you want to know more about the eligibility criteria for this type of insurance.

  3. What is a decreasing term mortgage insurance policy?
  4. It is a term insurance policy in which the assured amount decreases annually, depending on factors such as interest rate and the term of the policy. Many insurers in Singapore offer decreasing term mortgage insurance policies.

  5. How can I apply for a Mortgage Insurance policy in Singapore?
  6. You can apply for a Mortgage Insurance policy by visiting the website of the insurer, or you can apply through 3rd party financial institutions that process all kinds of insurance policies.

  7. Can I apply for a Mortgage Insurance policy jointly with my spouse?
  8. Yes, you can apply for a Mortgage Insurance policy jointly with your spouse but if both you and your spouse are faced with an unfortunate event, the benefits will most likely be paid only to the first named policyholder.

  9. How is the premium calculated for Mortgage Insurance policies?
  10. The premium is calculated based on factors such as the policy you have opted for, your age, the tenure of the policy, your lifestyle, whether you are a smoker or non-smoker, your health declarations and so on.

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