Decreasing Term Insurance Singapore: Complete Guide 2026

Decreasing term insurance Singapore is a life insurance policy where the death benefit reduces over the policy term, typically in line with an outstanding loan balance — most commonly a mortgage. Premiums are fixed, but coverage decreases each year. It is the cheapest way to ensure your family can repay a home loan if you die prematurely.

In Singapore, decreasing term is most commonly structured as a Mortgage Reducing Term Assurance (MRTA), designed to mirror the amortisation schedule of an HDB or private property loan.

Decreasing Term vs Level Term Insurance

Feature Decreasing Term Level Term
Coverage amount Reduces each year Fixed throughout
Premium Lower Higher
Best for Mortgage protection Income replacement
Flexibility Low High
Common term 15–30 years 10–40 years

When to Choose Decreasing Term Insurance

Choose decreasing term if your primary goal is mortgage protection. As you pay down the loan, you need less coverage — so decreasing term is a cost-efficient match. If you also need income replacement for dependants, supplement with a level term policy.

MRTA in Singapore: HDB vs Bank Loans

HDB flat buyers can use CPF OA savings to pay MRTA premiums (via HPS — Home Protection Scheme). Private property owners typically purchase MRTA from a bank or insurer at loan drawdown. Shop around — bank-bundled MRTA is often more expensive than standalone policies from insurers like Great Eastern, NTUC Income, or AIA.

See also: Level Term Insurance Singapore | Term Life Insurance Guide 2026 | Insurance Gap Calculator

Frequently Asked Questions

What is decreasing term insurance?
A term life policy where the death benefit reduces each year, typically mirroring a falling loan balance. Premiums stay fixed throughout the term.
Is MRTA the same as decreasing term insurance?
Yes — Mortgage Reducing Term Assurance (MRTA) is the most common form of decreasing term insurance in Singapore, specifically designed to cover mortgage repayment.
Can I use CPF for decreasing term insurance premiums?
For HDB loans, the Home Protection Scheme (HPS) is a form of MRTA where premiums are deducted from CPF OA. For private property MRTA, premiums are typically paid by cash.
Is decreasing term cheaper than level term?
Yes — decreasing term premiums are lower because the insurer’s risk exposure falls over time. For pure mortgage protection, it is the most cost-effective option.
What happens if I sell my property before the policy ends?
You can typically surrender or cancel the policy. Check for surrender value and penalties — most MRTA policies return a partial premium on early cancellation.
Should I buy MRTA from my bank or separately?
Compare quotes. Bank-bundled MRTA is convenient but often 20–40% more expensive than identical coverage from standalone insurers. Always get at least one independent quote.
Does decreasing term cover critical illness?
Standard MRTA only covers death and sometimes TPD. You can add critical illness riders for an additional premium on some plans.
How is the coverage schedule calculated?
The benefit reduces each year based on the amortisation schedule of the linked loan, so payout always approximates the outstanding mortgage balance.
What is the difference between MRTA and HPS?
HPS (Home Protection Scheme) is CPF Board’s mandatory MRTA for HDB flats bought with CPF. It is a group scheme with standard rates. Commercial MRTA may offer better value for private properties or additional riders.