Mortgage-Reducing Term Assurance (MRTA / Home Protection Scheme)

Mortgage-reducing term assurance (MRTA), sometimes called decreasing term, is designed so that if you die or suffer total permanent disability, the payout settles whatever is left on your home loan. The aim is that your family keeps the roof over their heads without being saddled with the mortgage.

Because the cover decreases over time to track the falling loan balance, it is cheaper than level term for the same starting amount. It protects the debt specifically, rather than replacing income broadly, so it usually complements rather than replaces a level term or whole life policy.

The sum assured starts at roughly your loan amount and steps down each year as you pay down principal, ending near zero when the loan is cleared. Premiums can be a single upfront premium (sometimes financed into the loan) or paid regularly, and the term is matched to the loan tenure.

For HDB flats financed with an HDB loan, the Home Protection Scheme (HPS) is a mandatory mortgage-reducing insurance administered by the CPF Board, and its premiums can be paid from your CPF Ordinary Account. HPS pays the outstanding HDB loan if the insured member dies, becomes terminally ill, or is totally permanently disabled. Owners using a bank loan, or buying private property, are not on HPS and typically arrange a private MRTA or rely on level term instead.

Private MRTA premiums are paid in cash. Because the payout follows the loan and not a fixed sum, the protection naturally winds down as the debt does.