If you finance the MRTA or MLTA into the loan,mean the bank borrow you the money to buy the coverage of you,but benefit is for them, you will need to sign the absolute assignment and assign the MRTA or MLTA to the bank. Which mean the life assured will be you but policy owner will be the bank. So you have no right to cancel the policy except you do settlement for the loan including settlement by refinance.

This is also to prevent people getting cash out by finance the MRTA. If everyone finance MRTA and after a month cancel and get back the surrender value, mean they will get cash out from the mortgage loan already. It can be big money as some MRTA premium can be +-Rm100k.

But if you did not finance the MRTA or MLTA into the loan, then you may choose not to assign the MRTA or MLTA to the bank. Then you have the right to continue or terminate the MRTA or MLTA anytime.

means not advisable to finance the MLTA into our loan?

There are many types of MLTA, some of the can be financed into the loan while others, cannot. The ones that can be financed into the loans are usually by the insurance companies that have ties to the bank you are applying for.

For example: Great Eastern's MLTA product can be financed into OCBC's housing loan.

As an insurance agent as well as mortgage broker, I can say with great confidence that you should not finance the MLTA into the loan. Not only you are incurring interest that way, but you are also limiting your MLTA mobility. MLTA is supposed to be attached to you and only you, not absolutely assigned to any party - so you can take it along with you when you need to settle the current mortgage and bring it over to a different one.

It's depend on the condition. If the cost of MLTA is cheap enough and you can get better rate from finance the MLTA, i will say why not?

For example:

WITHOUT Finance the MLTA into loan
Loan = Rm500k
Rate = BLR-2.4%
Tenure = 35 years
Monthly installment = Rm2350.83

WITH Finance the MLTA into loan
Loan = Rm500k
Rate = BLR-2.5%
Tenure = 35 years
Monthly installment = Rm2320.05

Different = Rm30.78

If the MLTA is only cost Rm7000, with BLR -2.5% for 35 years. It's only cost Rm32.48 per month.

So basically if you finance the Rm7000 MLTA into loan and get the BLR-2.5%, you only pay extra :-
Rm32.48-Rm30.78 = Rm1.7 per month.
Rm1.7(one teh tarik) per month for MLTA coverage, I will say why not in this case.


But if the cost of MLTA if much higher or the MLTA plan that the bank offer is much expensive, it might not worth for it because you have no choice but to choose the plan from the panel insurer of the bank only.

As sometime you maybe can get much cheaper or better benefit MLTA plan else where. So it's better to get more quotation from different insurance company and do the comparison which is the best choice and value for money.

And also for MLTA, we can choose to pay by monthly or yearly and it's free of interest. Why do you want to pay a lump sum by finance the MLTA premium into the loan and let the bank earn more interest from you?

You can choose not to pay for the MLTA premium in hard time, but you can't miss to pay the loan installment or else many problem or troubles will come to you.

So if you have the choice, will you want to finance the MLTA into the loan?

This post has been edited by onnying88: Dec 24 2014, 02:25 AM

I am getting a 800k myr loan... why i am quoted only 6000 myr+ MRTA (1 time payment) for 10 years by the bank? Can i confirm MRTA is a one time payment?

Hi all,
I planned to take shortest (10-15 yrs) MRTA for best blr only, I understood that it's reducing balance method and the premium isn't enough to cover the rest of loan AT ALL in the "end" of mrta.. (let's say 9-14 years, MRTA will only covered peanuts for my loan left amounts)

but this's because I will not hold this property too long (until the end of loan), it's a single name property so I never have thought to take it 30 yrs. (Which is expensive and pointless imo)

Am I thinking right?
Or I've been overlooked another necessary factors?

Please advise and have a nice weekend.