There are a few types of insurances available when getting a home loan which can be confusing to new home owners. So what are the types of insurances available and what are the differences between them?
Mortgage Reducing Term Assurance (MRTA) is a life insurance plan with decreasing sum assured over time. It is used to cover the home loan owed to the bank.
Mortgage Level Term Assurance (MLTA) is a slight variation from MRTA and offers an alternative to borrowers looking for life insurance which offers protection, savings and (in some policies) returns on the premium. This is a personal plan financially protecting the borrowers dependents when the borrower has passed or has lost the ability to generate income.
Mortgage Reduction Term Takaful (MRTT) is a reducing term life insurance that follows the takaful principles of Islamic finance. It is an insurance plan covering the cost of a home loan in the event of death or total permanent disability. It is similar to MRTA whereby the sum assured reduces as the total value of your outstanding home loan also reduces.
Mortgage Level Term Takaful (MLTT) is a life insurance cover designed to provide financial support in the event of death or total permanent disability. The total sum assured in this cover remains level throughout the period of the cover. MLTT is an Islamic finance facility that provides certainty as to how much the insurer will pay out throughout the course of the plan. It sets out a guaranteed payment value, meaning that the sum assured which would be paid out on a claim is the same in the first year as it is in the last year of the cover.
Below are the differences between MRTA, MLTA, MRTT, And MLTT.
