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Mortgage Life Insurance, MRTA/MDTA vs MLTA for Property Financing

25th January, 2010

in Home Loan, Insurance, Property


Mortgage Life Insurance is an insurance that loan owner purchase when buying a property. It is designed to settle the outstanding loan balance in the event that the borrower dies or suffers from total and permanent disability (TPD) prior of settling the loan.

Basically there are two types of mortgage life insurance that are available in the market. There are Mortgage Reducing Term Assurance (MRTA) or Mortgage Decreasing Term Assurance (MDTA) and Mortgage Level Term Assurance (MLTA).

The table below shows the different between MRTA/MDTA and MLTA

MRTA MLTA
Purpose Protection Protection, Saving & Cash Value
Protection Reducing Protection throughout the loan tenure. Protection is leveled throughout the loan tenure.
Transferability Non transferable on New Purchase or Refinance. Premium will increase while age increases. Transferable. One MLTA can be attached to Any Loan. Transferable on New Purchase or Refinance.
Cash Value Reducing Cash Value throughout the loan tenure. Normally is much lower than Premium, and drop to RM0 at the end of loan tenure. Fixed Cash Value (Guaranteed) throughout the loan tenure. Policy Holder will get back the paid premium in the future.
Nomination Beneficiary is bank Beneficiary can be anyone.
Payment Lump Sum Payment or financed into Mortgage Loan. Payment Mode can be Annually, Semi Annually, Quarterly or Monthly.
Premium Low High
Example on premium* One time RM5,931.7 RM303.60 monthly or RM3,643.20 yearly or RM109,296 throughout the tenure
Example if there is no death or TPD* At the end of tenure owner will received RM0 At the end of tenure, owner will received RM109,296
Example if there is death or TPD** Insurance company will pay the loan balance of RM186k to the bank & beneficiary will received the home. Insurance company will pay the loan balance of RM186k to the bank & beneficiary will received the home plus RM50k cash

Note

* Example based on a loan owner at the age of 26 taking RM236k loan for 30 years

** Example based on loan remaining of RM186k

{ 21 comments… read them below or add one }

patchong May 7, 2010 at 11:17 am

Question – is there an age limit for MRTA; I understand that elderly borrowers (above 65yrs) cannot purchase MRTA. Is this true?

Reply

CHONG KONG HUI May 7, 2010 at 4:15 pm
kj May 9, 2010 at 9:10 pm

Hi,

I would like to fine out with you about home loan insurance. I am buying a house soon but i am hiv+ so it is i cannot buy any homeloan insurance or what type of homeloan insurance are suitable for me to buy? kindly reply…

Regards

kj

Reply

Chong Kong Hui May 10, 2010 at 10:24 pm
soo June 7, 2010 at 10:11 am

i will buy house soon. N now compare both insurance. dun knw which 1 is better.. can you advise? let say if i want to buy the MLTA, loan amount is 130k, 29 yrs old.. how much is the fees need to pay for that insurance?
Thanks

Reply

Chong Kong Hui September 18, 2010 at 11:39 am

There is more than a product that can serve MLTA concept for mortgage protection.

Check for details and get a plan that fits your financial position (an accounting new term for Balance Sheet).

Reply

AskChong February 15, 2011 at 9:45 am

MRTA is a life insurance.
Investment link policy is a life insurance.
MLTA also is a life insurance.
PA also is a life insurance.

Reply

aisyah February 18, 2011 at 12:06 pm

Hi,
I will buy a house soon, my 90% loan : RM 276,126.30 Im interested on taking MLTA instead of MRTA proposed by the bank. Can u consult? about what is the cost to pay? is it shariah compliance? TQ in advance.

Reply

1-million-dollar-blog February 18, 2011 at 3:07 pm

aisyah,

You can look for takaful based MLTA for shariah compliance such as PRUBSN Takafulink. For the premium, best if you contact insurance agent as the calculation is also based on your age and few other things.

Reply

Bertille March 29, 2011 at 6:12 pm

Hi.

Just wondering whether it’ll benefit us if we opt for Investment link for MRTA from Great Eastern instead of taking the MRTA from bank? My friend were saying its cheaper & serve the same purpose.

Reply

Nahar April 18, 2011 at 8:47 pm
Vanessa kong November 5, 2011 at 1:06 am

I’m Vanessa kong from ING. If you have any question for comparision MRTA and MLTA the different. Pls email me as:[email protected] or call my mobile: 0122932823.
Thanks

Regards

Vanessa Kong

Reply

Cindy May 2, 2013 at 7:53 pm

Hi Vanessa

I am waiting for a loan approval for my house for RM300,000 tenure 30 yrs. Can you advise what sort of insurance to purchase…. what is the differnt between MRTA n MLTA can work out both for me please… I am 30 yrs old and single. thks

Reply

gurmit singh January 24, 2012 at 12:41 pm

i already took home with mrta, can i can cel and change to mlta

Reply

Lawrence April 19, 2012 at 2:48 am
Hidayah November 4, 2012 at 12:45 am

Hi,

I am buying a house and actually waiting for the loan to be approved soon. Details are as follows:
Loan owner’s age: 30 years
House price: RM920,000.00 and its a sub-sale house
Loan: RM 800,000.00
Tenure: 40 years

FYI, this is my first house. Can you please advise which type of home loan; i.e. MRTA or MLTA suits me best and how much for the MRTA premium for one off payment or MLTA based on monthly payment would be based on my details given here.

Many thanks.

Reply

Meltina December 31, 2012 at 12:11 am

Hi there, I recently buy an apartment with my mom as joint borrower but on the sale & purchase agrrement , its only my name..(under the bank advise, i need a joint borrower since my komitmnt is too high) also the bankers told me under MRTA, should anything happend to me, my mom will have to pay for the remaining balance. Can I purchase MLTA to make sure that should anything happend to me, my mom is zero free?

Reply

Ivan Chua January 13, 2013 at 1:46 am

Hi Boss , i’m 28 years old and m buying my first house with a Rm390k loan , could you please advise me if i plan to take a Rm500k cover MLTA up to 40 years tenure. How much shall i pay monthly and is this mandatory to pay continuously until end of the 40 years tenure in order to claim back my premium ? Kindly email me at [email protected] thanks ~

Reply

Eve April 28, 2013 at 11:45 pm

Is MRTA (both principle & interest) allowed to be deducted from rental income?

Reply

Sharif Rahman April 30, 2013 at 10:10 am

I read that many are buying their houses for the first time. Before buying please take a harder look whether you really can afford it. My partner and I wrote and explained the rational of house ownership, whether it will be beneficial for you in the long term. As the market in the US has shown, there are great risks involved in owning a home on high loan amount.

The rule of thumb is, never get a joint loan. If one person cannot afford it, that’s mean the house is beyond reach. Stats showed that divorce can occur (rather easily) and will cost you a bomb in paying for the house that none of you would want (due to the stigma of living together).

Also check whether you can pay the loan within 10 yrs. Do not drag longer than that. If you could not pay it in 10 years time, that’s mean you are borrowing too much on margin. You are stretching it.

Can you put 30% down minimum? If you cannot, that’s mean you have little surplus and has never enjoyed the ‘joy’ of investing.

For everyone’s information, a house is only worth the amount of money that the potential buyer would like to pay, or can afford to pay. Imagine if your buyer could not afford to buy it at such high prices, what would the value of your home would become? Further, keeping the house empty will result in immediate loss, one which you may never recover from, ever.

Stick to renting, you can move to wherever you want anytime, plus it is cheaper.

If you can afford it, then go ahead and buy (but don’t over do it!).

Reply

Leng November 8, 2013 at 1:02 pm

Hi, on this year May’13 i was buy 1 unit double storey house from Bank Lelong. But for something problem so fail and can’t buy this house. But i already buy the MLTA from Issurance company. Can i cancelled this MLTA and get back the money?

Reply

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