MRTA or MLTA: Which Do I Choose?
Deciding to buy a new home is not a frivolous decision. It is a huge commitment and money sink and you’re likely to spend a good portion of your adult years paying off your dues.
There are 2 different life policies for your home :
MRTA (Mortgage Reducing Term Assurance) and MLTA (Mortgage Level Term Assurance).
MRTA is much cheaper than MLTA.
|
|
MRTA |
MLTA |
|
Purpose |
Protection |
Protection, saving and cash value |
|
Protection Level |
Reduces throughout the loan tenure |
Stays consistent throughout the loan tenure |
|
Transferability
|
Non transferable on new purchases or refinance. Premiums will also increase in accordance to your age |
Transferable as one MLTA policy can be attached to any loan. Need not show proof of your age again |
|
Cash Value
|
Cash value reduces throughout the loan tenure and will drop to RM0 at the end of the tenure
|
Cash value is fixed throughout the loan tenure and the policy holder will get back the paid premium in the future |
|
Beneficiary |
Bank |
Anyone |
|
Payment |
Either a lump sum or it can be financed into your mortgage loan |
Annually, semi-annually, quarterly or monthly |
|
Premium Cost |
LOW |
HIGH |
|
If there is NOdeath or TPD |
Owner will receive RM0 at the end of the tenure |
Owner will receive what he paid at the end of the premium |
|
If there IS a death of TPD
|
Insurance company will pay the outstanding loan balance to the bank and the owner or relevant persons stated in the will in the event of a death will receive the home |
Insurance company will pay the outstanding loan balance to the bank and the owner will receive the home and cash |
Choosing one or the other is a choice you’re going to make yourself. Just make sure that when it comes to providing sufficient coverage for you, your house and your family, you do not allow money (or lack of) to be the deciding factor.
