It depends. You can buy each half half or both buy the amount of the loan. Example, loan 500k and both also buy 500k coverage for both instead of 250k each. Of course you have to pay more then lar.

This post has been edited by GreenSamurai: Dec 17 2014, 07:21 PM

Actually this will be like buying mrta for the sake of buying it.

If say husband and wife. If say wife earns more than husband, then husband passed away, wife can still afford loan easily, but if husband alive but cant afford the loan, in this situation, i say the person to buy mrta is wife.

At the end of the day, the purpose of insurance is to protect from the loss of something, really dont buy for the sake of buying...

It's worrying why you would need to worry about possibility of refinancing in the first place.

I dont work for banks so i dont know how the loan is linked to the mrta/mlta.

In actul fact, there's no hard rule that says this mrta can only tie to this loan. Mrta/mlta is designed to match your housing loan outstanding. Problem for this is, in mrta case, the matching fails when there's refinancing. But, just because it doesnt match, mrta purpose is still there, which is to assist to cover the loan balance upon death of assured (borrower in this case).

Analogy i can think of is... Food. Just because one is only full after eating two cups of rice, doesnt mean that 1 cup of rice is useless, just means it's not enough.

I think bnm will be on to the insurance company/bank for forcing customer terminating mrta/mlta because of refinancing. But if actual bank practice is as said... Then... You might want to consider other insurance policy.

Not at all. I'm not a banker but I broker for 5 banks. None of them force you to take MRTA and all my clients take MLTA.

MLTA would not be forfeited if you do refinancing, early settle, or sell the house outright. Some bankers... do have their commission tied to selling insurance, which may be the source of this "confusion"

Hi all sifu do you know how much is the mtra for a 750000rm loan?

What is the age of the person to be covered and the tenure of the loan?

You need to give more details such as

Your Age, Gender, Smoker/Non-Smoker and tenure of MRTA

But off the cuff, for a 20-year tenure, in range of RM20K+/-

Hi 35year old, non smoker, 30 years. By the way is it a one time payment of 20k? And what happened if i sell off the property? Tks

Okay, 35-yrs old, a bit cheaper.

The MRTA Premium is a single premium, meaning payable one lump sum and Banks are willing to finance it

If you sell of the property, you can get a refund / rebate of the remaining premium but it will not be on a straight line basis

Noted. Your calculation for MRTA is as shown below. However, keep note that all banks will have their MRTA premium calculated differently. This is just a guide.

MRTA is always paid in 1 lump sum; the only differences is between you financing the cost into the loan VS you pay for it by yourself.

Also, I can help you with MLTA. MRTA is usually financed into the loan since you have to pay it in lump-sum, thus will incur interest. It is also absolute-assigned to the bank, which means the bank owns the policy although you paid for it; the insurance payout/claims is payable to your loan account though, so you (your beneficiaries) still own the house that is not encumbered (mortgage fully paid off) anymore. MLTA is yours, that you can carry it wherever you are, not tied to any loan facilities at all. In the even of death, TPD, and critical-illness, the claims are payable to you and/or your family to decide whatever you want to do with that money.

Usually it is between paying off the mortgage in full VS pay it as normal and reinvest the money elsewhere. It is up to you, unlike with MRTA



This post has been edited by wild_card_my: Dec 18 2014, 12:24 PM

It's not a must, but banker will tell u loan hard to be approved without it.
By the way, just buy it la...anything happened also wont affect family wife children..

Hi Sifu, based on your quotation, the profit rate is 4.50%. This is the Interest Rate right? Current BLR is 6.85% less 2.40% = 4.45%

But there should be a buffer right, perhaps say up 2.0% over the next 30-yrs. If Interest Rate is pushed up to say 6.50%, what would be the MRTA Quotation?

Yes, it is the interest rate (Islamic loan calls it profit, hence, profit rate) of the housing loan that you are getting; and the calculation is only used as a guideline. It cannot be used without any confirmation in the LO. The MRTA received by the customers will depend on a lot things, and each customer will have different numbers, just like how each customer is quoted different interest rates for their housing loans.

1. To answer your other question, if the MRTA is financed into the loan, the premium paid does not change and will not increase, but the repayment for the cost of that MRTA premium (now part of your outstanding balance) will change according to movements of the BLR (or BR in the near future). But this also means that the MRTA would not be able to cover the outstanding balance, as MRTA has its own curve of claim-payable that it follows. If your loan balance repayment follows a different curve, in the event of DEATH, there may still be some balance that the beneficiary needs to pay.

2. Also, let it be known that when quoting for the MRTA premium, the calculation takes into account of the current effective interest rates for the housing loan that you are offered. For example, if the client's interest rate is 6.5% and not 4.5% as quoted, the single contributions are increased to RM 48,251.00 (MRTA cost financed into the loan) and RM 45,334.00 (MRTA cost NOT financed into the loan)

But why? Because MRTA tries to cover your outstanding balance, and the earlier years of your tenure with the loan is the costliest parts of the MRTA because the outstanding balance is higher than in the later years (as you have paid off bigger portions of your outstanding balance). However, if your effective interest rate is higher, the curve to finish paying off your outstanding balance would be different than if the effective interest rate is lower. Hence, higher cost of the MRTA premium.

I hope I haven't confused anyone. MRTA is... in my opinion, a minimal type of insurances, it has too many limitations. MLTA is much much more flexible for just a little more.

This post has been edited by wild_card_my: Dec 18 2014, 01:00 PM

Hi for mtra do i get back any return after the loan? What critical illness does mtra covers?

MRTA? No, you get nothing in the end of the loan tenure. Typically, MRTA also does not cover ANY critical illnesses and in many cases, it does not cover any total-permanent-disability derived from a critical illness too.

MLTA? It depends on who designs your MLTA product, you can or cannot get something back at the end of the tenure. However, as a financial planner on the biggest scheme of things, I cannot vouch for putting any investment in the MLTA. Minimize the premium. MLTA covers TPD and can cover critical illness (if you choose this rider)

Anyway, here is my illustration of the MLTA vs MRTA. This was done like 2 years ago so if you have any questions, dont be afraid to ask





This post has been edited by wild_card_my: Dec 18 2014, 01:22 PM

You guys can have a look on my thread below and there is many MLTA and MRTA quotation with different scenario or age and loan amount. You can get some picture and have the idea for comparison.

https://forum.lowyat.net/topic/2807168

So for MTLA the minimiun is 15 years before i can surrender? What happens if i sell off the property before 15 years?

Nope, with MLTA you can surrender it anytime. Remember, with MLTA, the policy is attached to you, it has nothing to do with the mortgage that you have. You can sell of the mortgage/property, refinance it, or early settle it; and the MLTA would still stick with you.

I understand that MLTA/MRTA may not be so important if we buy a house for investment, correct?

However, if the house is for own stay, do we really need to buy MLTA/MRTA?

if we are not sure we will use it for own stay/sell/rent it, should we top up MLTA/MRTA on our loan?

MRTA stand for Mati Rumah Tetap Ada.

So for own stay, it highly advisable to buy either MRTA or some form of MLTA.

If you are not sure whether its gonna be own stay or long term investment,then buy some form or Regular Premium MLTA.

you can choose to stop when u are going to be sure it's not gonna be for own stay. The premium paid might be burn but cheaper than u finance the MRTA or MLTA into the Loan.

But wait, some ppl say that if you finance the MRTA or MLTA into the Housing Loan, you cannot terminate the MRTA or MLTA unless your Loan is fully settled.

This post has been edited by cfa28: Dec 22 2014, 03:09 PM