Mortgage Reducing Term Assurance (MRTA) is sometimes referred to as Mortgage Life Insurance. If you are taking a housing loan to buy a property, chances are that you will be required to pay for MRTA by the bank as part of your loan arrangement. It is an insurance policy that provides financial protection for property loan borrowers and their families.
MRTA helps you settle your housing loan in the event something happens to you such as accident, illness and disability. It will cover the unpaid portion of your loan if this happens. It gives you peace of mind and protects your family from losing a home since it provides coverage even during the construction period. The premium is reasonable, and it can even be financed by your bank.
Benefits?
- Lump sum repayment to your mortgage loan in case of death or total and permanent disability due to natural causes, illness or accidents.
- Coverage is 24 hours, worldwide.
- Premiums can be financed by the bank.
- Discount on the premium for joint life application if your home is jointly owned by your spouse or immediate next of kin.
What does MRTA cover?
It covers disability, illness or death and also total and permanent disability. However, there are exclusions such as:
- Death due to suicide and AIDS/HIV
- Total or permanent disability due to self-inflicted injuries, armed forces, riot and civil commotion, flying other than as a fare-paying passenger, racing on a horse or wheels
- Pre-existing conditions such as AIDS/HIV
How much would my premium be?
- Premium factors depend on the sum assured, interest rate, term, construction period, premium financing, joint-life, age at next birthday.
- If you are between 18 and 60 years of age and in good health, you are eligible to take up MRTA. You can always make an application by filling up an application form at the Bank.
Why would you need it?
MRTA is a protection mechanism for all people with mortgage, and especially for households with sole breadwinners. Generally, in the event of untimely death or disability of a housing loan borrower (significantly if he or she is the main income earner), the greatest problem facing surviving household members is their ability to pay off the outstanding loan.
By signing up for this insurance, surviving family members will not be left with such burden because it covers part or all of the unpaid portion of a housing loan.
How does one apply for it?
In Malaysia, home loan applicants do not need to go out of their way to find an MRTA provider because it is usually incorporated as part of the mortgage application process. Commonly, you’ll only be required to pay a single premium. You will not need to pay a premium again throughout the entire duration of the policy.
