i have recently come across between MRTA vs MLTA , base on some calculation with inflation adjusted, i found that MRTA is actually more convincing?? am i wrong ??

House: 350K
LOAN: 225k
BLR: 6.6 - 2.4 = 4.2
Tenure: 38 years
MRTA = RM10k lump-sum absorb into loan
MLTA = RM2190/year for 225k coverage

so lets say i put mrta absorbed into loan, with interest total amount will be rm20032, yearly paid 527.16, monthly 43.93, but infact im not paying that much as inflation goes around. my yearly installment is not worth that much.

1st year = 527.16*0.96 (4% inflation averag) = 506.67
2nd year = 527.16*0.96^2 (4% + 4% next year) = 485.83
3rd year = 527.16*0.96^3 ( 3 yrs inflation add together) = 466.40
4th year = 527.16*0.96^4 = 447.74
5th year = ......... = 429.83
.. = ...
.. = ...
.. = ...
38th yera = ....... = 107.28

actualy value of money ( inflation adjusted) = RM9444.727 actual value of paid amount.

as there is no return money when loan end, my actual loss will be as below.

= RM9444.727

COMPARE to MLTA

1st year = 2190*0.96 (4% inflation averag) = 2102.4
2nd year = 2190*0.96^2 (4% + 4% next year) = 2018.3
3rd year = 2190*0.96^3 ( 3 yrs inflation add together) = 1937.57
4th year = 2190*0.96^4 = 1860.7
5th year = .........
.. = ...
.. = ...
.. = ...
38th yera = ....... = 464.25

actualy value of money ( inflation adjusted) = RM39315.62 actual paid value for MLTA

in the end of loan, get back the total amount of paid money.
2190*38 = 83220 in year 38/ inflation adjusted (83220*0.96^38) = RM24,454.83 actual value money in yr 38

actual loss : actual paid value - actual received in yr38 = RM39315.62 - RM24454.83 = RM14860.7


so compare to MRTA vs MLTA, MLTA is actually loss of value of money as MRTA only loss about 9444.72 whereby MLTA even get back the moeny, after adjusted still loss of 14k!!

further more, the extra money i save yearly in choosing MRTA (2190 vs 527.16), rm1662.84 yearly, i can buy some life insurance which also act like MLTA / invest in saving plan, stock market, mutual funds etc. OR even more put back into my loan principle to finish my loan tenure faster.


im now confuse , pls share wif me any idea u guys think

This post has been edited by rantao333: Jan 8 2013, 08:58 PM

I think you need to know the definition of MRTA/ MLTA first. Both are meant to reduce or eliminate the burden of your spouse/ family members if you no longer able to pay for your mortgage due to permanent disability or death.

With MRTA your family still has a place to stay if you are no longer here.

With MLTA your family has a place to stay plus a sum of money to use.

Personally I find MRTA/ MLTA benefits your family more than yourself. To most people a house would be the most expensive purchase, and MRTA/ MLTA is meant to address the financial burden of your family and love ones.

Some people rather pay more to get higher coverage on their life insurance to cover the outstanding loan, or if you are certain that your investment in funds and shares can pay off your mortgage then you may consider not getting MRTA/ MLTA at all.

By the way MLTA is not tied to the property/bank... You can transfer your MLTA to cover your other properties but MRTA cannot be transferred. These differences cannot be measured with inflation/ monetary value.

MRTA and MLTA does not benefit you as the property owner. Whatever figures and numbers you put up means nothing to you... But it could mean everything to your family.

actualy i know, put aside the money talking. by looking into risk management. both MRTA / MLTA are doing same thing in protecting my family from losing the house. but

with MRTA ( 527.16 yearly) = family has a place to stay + extra yearly 1662.84 for risk management
with MLTA ( 2190 yearly ) = family has a place to stay + extra money incase of TBD/death

with that extra 1662.84 yearly, can i use that money to buy a life insurance whereby yield better coverage for TDB/death compare to MLTA?

with that extra 1662.84 yearly, i can put into my housing loan principle which will faster my loan paid up period to 2040 instead of 2051, a total 11 years of earlier settlement, or RM70258.15 save of interest.

isnt that sound more convincing??

The 2190 yearly not fully used to buy MLTA only, the actual MLTA premium might only consist of certain percentage of the amount subject to your age and gender.

Usually insurer will also use some portion of the remaining amount for investment. So far, heard two types of investment - one is guaranteed return and another one depends on how the fund perform.

Here a table to compare the 2:

can u intro some good banker to me??

your figures are made with the assumption that at the most ideal situation which your RM1662.84 "savings" is derived from 38 years... you assumed that you will be alive and kicking after 38 years.

Spin this a little, let's say you "left" on the 5th year (just an assumption... my apologies, no offence) and you might left with outstanding loan amount of RM210k.
assuming BLR is the same on the 5th year,
MRTA: your bank clears your mortgage, your family gets your property
MLTA: your insurer pays your beneficiary RM225k, your beneficiary use RM210k to clear your mortgage and they left with RM15k in their pockets

Now assuming you "left" on the 20th year (again let's assume BLR is fixed):
MRTA: your bank clears your mortgage, your family gets your property
MLTA: your insurer pays your beneficiary RM225k, your beneficiary use RM100k to clear your mortgage and they left with RM125k in their pockets

So my question to you: if you really "left" before 38 year what savings do you get? something or nothing?

Hi guys,

I have a question , yesterday my bank just give me the letter offer for my housing loan. And the agent tell me, i m compulsory to choose between MRTA/MLTA. So its a compulsory to buy ?

As long u have ur own life insurance, u can opt not to choose the MRTA or MLTA

That means we can ignore MRTA & MLTA if have life insurance?

its just a top up insurance. No obligation must take. Some loan do tie up with this 3rd party insurance by offering u a slightly better rate.

For eg, if company loan, why there are no MRTL / MLTA ties with the loan. But the risk is still there only thing the tenure is slightly shorter.

Some banks advise you to take up MRTA/MLTA with them because they will give you better loan rates.

My bank gave me BLR-2.45% when I took up MRTA with the same bank. Else they only give BLR-2.4%

Hi all,

Im Jo Surf from OCBC, need advice on housing loan? installments calculation and DSR for each income range and do drop a PM

Usually i cover new purchase, refinance, top up and commercial loan

Lee Jo Surf
leejosurf@gmail.com
016 3700496

Hi all,

Im Jo Surf from OCBC, need advice on housing loan? installments calculation and DSR for each income range and do drop a PM

Usually i cover new purchase, refinance, top up and commercial loan

Lee Jo Surf
leejosurf@gmail.com
016 3700496

Depends on how much is your life insurance coverage and whether that is a comfortable amount for your love ones and family.

Say if your life insurance covers RM800k and you are still serving your housing loan (say you bought a RM500k house, loan period 30 years). You can opt not to get MRTA/MLTA but do note that if anything happen to you your family members will have to continue serving the mortgage and pay the bills with the RM800k they get from your insurance company. You need to ask yourself if the RM800k is enough for them, and how long they will be able to sustain with that money.

With MRTA your insurer pays the bank and your family keeps the house, and your love ones still get RM800k from your life insurer.

Personally I find MRTA being one of the cheapest means of insurance for the largest purchase for average people. I paid RM12k (lump sum) for my MRTA to cover my RM600k house, and I paid RM6k per year for my life insurance that gives me the same insurance payout. I don't want my family to carry my debts and loans after I pass away.

Still, it all boils down to your preference.

MRTA cheap doesnt means its covers all risks. must read through the policy. Says u loss ur eye sight which result u unable to continue ur current works, no more money support, doesnt mean the MRTA will cover u all the remaining loan balance if u loss ur eye sight.

Read the policy, cheap doesnt mean good and perfect.

Never ever let urself feel secure if u think ur MRTA is covering all risks

If buy MRTA plus other personal insurance (PA, life insurance)?

I think should be adequate rather than MLTA.

From what I know, MLTA commission for agents is very high.
But MRTA their commission (% wise), is lower.

So just a thought, MRTA might be a better buy due to the fact that the insurance companies can't afford to give such a high percentage of commission. Hence, MRTA is a higher burden for insurance companies in a sense.

if you are comparing the exact dollar value... means you don't really appreciate the implicit value of MLTA...

no one ever doubts that MRTA is cheaper than MLTA... but it is the norm in life, where u get what u pay.... so in MLTA, you pay higher premium, u will get to enjoy more benefits.. but depends on your preference and your own cost benefit analysis..

for example:
1. MLTA is transferable... meaning whenever u sell this property and buy a new property, u do not need to buy new property insurance. As the MLTA follows the buyer, you are safely covered => Cost savings #1

2. Cash value for MLTA... if you buy MRTA, you only get protection. at end of the day, it is burnt. whereas for MLTA, there is cash value. MLTA has a breakeven where u will determine at what point u will get back the full premium u paid for. and at end of the day, in some cases, you will get back more than u paid. MLTA is never burnt. => Cost savings #2

3. Entry age... when you buy MRTA for property 1, then 5 years later buy MRTA for property 2, and 5 years later buy another property 3, assuming property price is the same value for all 3 property purchases, the MRTA costs will keep increasing (besides the point that you need to buy new MRTA for every new property), because of your age + health. However, for MLTA, it is transferable + it is locked at your younger age premium. => Cost savings #3

4. Excess of protection coverage to be paid to beneficiary... Assuming MRTA, protection is at decreasing amount. So coverage just adequate to pay off your property liability. However for MLTA, protection amount is fixed. so your beneficiary get to enjoy the difference between your original coverage vs the remaining property debt. Cost savings #4

Briefly shared some of the main cost savings... but i cannot tell you how much you can savings in terms of monetary... because i wouldn't know what will happen in the future. ie how many property you will buy, or how is your health and longevity in the future...

Let me know if you want to know more... Also, we do offer optional financing of MLTA into your loan... OCBC is the only bank that allows that...



Cheers!

don't be too concern on what the agent earns vs what value you are buying... ;-)
anyway, the numbers are not too attractive..

Just an example... lets say your MRTA is RM20k... commission 10%, will give you commission of RM2k..
versus lets say your MLTA premium is RM2200 p.a... commission 100%, give you commission of RM2.2k

customers always think bankers trying to sell something because of higher commission... seldom the case..
banker's responsibilities just to share the best available product, and help customer make informed decision...


cheers!

How about life insurance? more illness coverage and able to get back portion of money upon death/ serious illmess?

AFAIK life insurance covers critical illness, TPD and death, investment-linked being optional. MRTA only covers TPD and death, you have to serve your loans if you are critically sick.

Actually - life insurance can be used as MLTA as well... it's just the intention that is different.
Also, when u buy MLTA (aka life insurance), you also have the option to choose whether to cover death + total permanent disability only (ie similar with MRTA) or choose to cover death + total permanent disability + critical illness. of course, if you choose 3D, pay higher premium...

last but not least, u can choose to buy guaranteed return vs investment-linked... each has its pro and cons, and depends on your affordability.
at the end of the day, some ppl just want to make sure their loved ones are protected... whether u buy MRTA or MLTA...


Always remember, you get what u pay... pay more, get more benefits and vice versa...
and its also a normal trend that if u pay more, u get more value... ie if u pay RM100 p/mth - u may get RM100k coverage, but if RM300 p/mth - u may get RM400k coverage...


Cheers!

P/S:

Not forgetting.. many ppl just use their existing life insurance as their MLTA...

That defeats the purpose of MLTA/MRTA...

Ultimately, when u buy your first life insurance policy, the intention is to either provide your loved ones with a lump sum money to support their needs or your living care (in case of critical illness).

However, when you say u use your life insurance in place of MLTA, it also means that you are using the lump sum insurance paid out, to repay ur property loan.

Ultimately, you are not helping to lighten the burden of your loved ones...

If you are thinking of buying new life insurance policy with additional sum assured, then that is OK!


Cheers!

can we extent the MLTA if the house re-mortgage?

As i know, if u actually settle your house loan with bank, the MLTA will still continue.

Usually most bank doesn't requires us to assign the to policy to the bank.

Eventhough if we assign the policy to the bank, once the loan is settled, the bank should assign the policy bank to the owner.

MRTA vs MLTA VS life Insurance Which is better BETTER ?

Answer= life Insurance with no cash value return is better and very cheap.

You pay 1K per year for 450K protection.
Buy insurance for protection purpose not for cash value return.

Forget about transfer not transfer ....

Means die only got rm450k? or serious illness and accident?

I agreed with you. RM1k for rm450k is very good. if live for 30 years nothing happen, burnt rm30k which still acceptable, as our house property !!!!! increase its value, and I can cancel it once sold the property right?

add in,
If buying mlta/mrta and sum into loan, the interest also need to be taken consideration.

E.g i extra pay rm 200 per month, also can shorten the tenure up to several years.

mrta/mlta/life insurance, all is good, if limited budget, go for life insurance which u can easily upgrade anytime =)

This post has been edited by Hello_kitty 89: Jan 18 2013, 04:35 PM

Hi,
Want to know it is possible that we can choose our own insurances package(mlta/mrta) beside the banks offer when we apply the loan from the current bank?
Thanks

I think it is best to refer to your offer letter.
Most of the bank doesn't need mlta/mrta nowadays unless you get better offer with them.

give me the contact to reach the source to buy this insurance.

one year pay 1k, when die after 40 years my children got 450k.

no need buy property for next generation. just buy this. sure earn.