Ok lah.. I'll put this here for info. Heard from a friend of mine who blur blur go and buy a house and never heard of the options available for MRTA. Here goes..

Mortgage Life Insurance

Mortgage Life Insurances are designed to pay off the outstanding loan balance in the event that the borrower dies or suffers from total and permanent disability (TPD) before the loan is fully paid off.

Basically there are two types of mortgage life insurance available in the market. One type is commonly known as Mortgage Reducing or Decreasing Term Assurance (MRTA or MDTA) and the other choice is Mortgage Level Term Assurance (MLTA).

Mortgage Reducing Term Assurance (MRTA) or Mortgage Decreasing Term Assurance (MDTA)

MRTA or MDTA is a reducing term life assurance specially designed to protect a loan borrower against death or TPD (total permanent disability) due to natural or accidental causes. Some lenders will allow you to finance and add the premium to your home loan (up to a certain percentage of your loan amount).

MRTA or MDTA is a simple insurance policy and has become a common and acceptable policy taken up by the borrower whenever he takes up a mortgage loan. The premium is paid upfront in one lump sum. Some lenders will finance and add the premium to your loan. The borrower can choose the amount and tenure of the coverage and the amount of premium will be determined by these factors as well as his age and gender. Banks normally encourage the borrower to take up this policy by giving better pricing on their interest rates if the borrower signs up a MRTA or MDTA policy.

To the borrower this is relatively a hassle free, affordable and necessary policy as their mortgages are covered in the event of any unfortunate incident that may caused death or TPD.

Mortgage Level Term Assurance (MLTA)

MLTA is a slight variation from MRTA or MDTA and offers an alternative for a borrower who is looking for a life insurance which offers protection plus savings and in some policies returns on the premium.

Premium is paid on a monthly, quarterly, half yearly or yearly basis and the policy holder can choose to have a wider coverage other than death and TPD. The amount of the premium will be determined by the usual factors and the scope of additional coverage.

Comparison and Features of MDTA and MLTA

Life-MLTA
1. Transferable
This policy is transferable whenever the borrower buys a new property or refinances his loan with another bank.

Example: Transfer this policy, adjust the sum assured to match the new loan, as many times as you need.

2. Insurability is Guaranteed
You purchase only once, with the same sum assured, there is no need to prove your health condition again.

3. With Savings or Returns (Cash Value)
Premium paid will be accumulated either as savings or savings plus returns. The cash value can be used to reduce or pays off your mortgage.

MRTA
1. Not Transferable
In most cases, new MDTA policy has to be taken up whenever a borrower changes his properties or refinances his loan with another bank
Example: 5 yrs later, refinancing at the older age, for same tenure of same loan amount, the MDTA cost is higher.

2. Insurability is not Guaranteed
Most of the time every time you finance your property, you have to prove that you are healthy to purchase MDTA.

3. No Cash Value
It is an expense with zero cash value at end of the mortgage tenure.

In lament term with example :
For example : The applicant name is Ken. He's a 24 male and bought a property for 230k but he only take 100k loan.

MRTA scenario
So if he purchase RM100k for 30 years MRTA the premium will be RM2165 and the surrender value from time to time is less and less. So, if anything happen to Ken at 5th year, the benefit he get from insurance com will be RM95299 while 10th year will be RM87319. So at the end, the value will be zero at 30th year.

MLTA scenario
If he purchase same RM100k and 30 years MLTA, he needs to pay RM61 every month and gets the level protection. He can choose to pay monthly, quarterly, semi-annually or annually. If Ken is TPD and can't make a source to pay for monthly installment, the benefits he get is RM100k no matter at which year. If Accidental death it would be X 2, the benefits will be RM200k. This is consider savings and you get the level benefits no matter 1st year or 18th or 30th year. Because the surrender value is high and higher. If Ken have nothing happen at 30th year, he can get back the value he prepaid. This is the benefit you get from MLTA. And, Ken is only 24, if he buy a better property, he can bring this MLTA over to that property and extend it.

This post has been edited by suiteng: Jan 9 2009, 09:18 AM

Thanks for the info
all the while i only heard of MRTA

Any idea which serve better?

If you have a life insurance or if you want to gao dim 1 shot, then MRTA lor..

If you don't have a life insurance, you can get MLTA. But you must fork up some to buy the rider (i.e. 36 CI).

for laymen, which is the best?
i still cannot make out the different.

Just buy life insurance. MRTA or MLTA are essentially the variant of this.

what life insurance gotta do with MRTA and MLTA? if got life insurance then buy MRTA, if no buy MLTA?

from the 1st post it seems that MLTA is alot better.

can we choose MLTA or MRTA when we apply loan? or the bank fix it?

Wrong concept.
If got life insurance, go for MLTA.

If you have no dependency, you could also assign your life insurance to insure your property in the event of death....but not advisable.

so.

my scenario is like this

property value is RM260
loan at 90%
Completed Property 2nd hand.
i'm only 23...

so.. in this case shud the MRTA benefit me more or MLTA benefit me more?

referrring to
"If Ken have nothing happen at 30th year, he can get back the value he prepaid"
The money i put in MLTA i can get back at the end?

MLTA is not transferable.
Also, it depends on which type of loan you took.
MRTA is calculated upfront and if you included into your loan agreement; try and imagine how the interest amount hyped up over the years.

Back to type of loans. I'll give mine as an example.
I took flexi loan.
Ok first thing first. The insurance coverage is for "what if" situation. It's meant to paid of your mortgage when you're hit by unfortunate incident mainly death or permanent disability whereby you can't work to pay off your mortgage.

On flexi loan, the principal value of the loan fluctuates but definitely getting lower by years. So why would I insure on the initial high amount up front if I know that I'm going to pay it off in 10 years time while I took 30 years loan? Every year, the amount I owed the bank is getting lower....think of the premium as car insurance. I insure only the amount I owe the bank.

In this above case, I would loose out on MRTA as it's not refundable also. So in the case of early settlement than the initial tenor or refinancing, one definitely loose out. Unless one plans not to refinance and just follow the repayment tenor.

Btw, I do not know about this getting back of money. It might be true if one "pre-paid" the amount. As for my case, I don't pre-pay for insurance or includes it in my loan. I renew yearly based on the amount I owe the bank.

i get from a blog

1.Mortgage Reducing Term Assurance (MRTA) or Mortgage Decreasing Term Assurance (MDTA)

Main = Protecton (reducing)
Premium = LumpSum

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2.Mortgage Level Term Assurance (MLTA)

Main = Protecton + Saving + Cash Value
Premium = monthly, quarterly,yearly

agree on not to add the MRTA as part of loan.

if MLTA can get back then defiantely MLTA is alot better.

MLTA is transferable by re-assigning the policy back to the insured or another financial institution, however continuity is up to the term length only.

Example: You took a MLTA for 20 years, after 5 years you refinance your loan and took another new loan with same amount for another 20 years. You can assigned the MLTA over, however with only 15 years left in the term, you might need to buy a new policy at an older age at a higher premium, subjected to health checks & etc.

Subjected to different insurer rules & regulations, another alternative solution would be to convert it into a whole life policy, which will also be subjected to a higher age based premium as well as health checks and etc.

Both MRTA and MLTA does not have cash value built up, only Mortgage Whole Life Assurance (MWLA) have cash value & savings over the years.
Basically MWLA is a form of Whole Life Insurance with specify focus on debt protection with features like lower cost, guaranteed cash value, etc.

However, you can have a combination of either 2 type, or even all 3 should you wish to, hence why some agents may tell you MRTA or MLTA can have cash value.

Basically if you can afford it go for MWLA, best value for money. But if you have enough Life Insurance, go for either MLTA (if you wanna leave behind extra for family) or MRTA (at least a roof over thier heads during your absence) or a combination.

Hope my explanation helps.

Should you have any further questions or want a quotation, you can always pm me.

Thanks. Best Regards.

This post has been edited by Zarth: Jan 31 2008, 02:51 AM

areankim,

Are you buying insurance to insure something, or trying to get money back?
Do you know how much you'll be paying for a level term insurance compared to a reducing term insurance?
And do you know why you really need to have mortgage insurance in the first place?

If you want to insure yourself according to the value of the loan you took, then you take MLTA. If you want cukup cukup to cover the "remainder" of loan then MRTA is enough.

In a way, MLTA is like insurance. You take RM200k loan, you insure yourself for RM200k. And if "choi choi choi" ADD, you get double the amount.

MRTA on the other hand, e.g. you took RM200k loan. After 10 years, you have paid off until left RM80k hutang (I didn't really count, illustration purposes only). If anything happens to you, you only get RM80k.

Recently i was approached by an insurance agent
he recommended me to buy Life Insurance over MRTA,
as Life Insurance able to cover the death + if the mature date reaches, you can withdraw the money + interest to payoff the homeloan.
(fyi, i've already have an lifeinsurance plan)

is this called MLTA?
coz i asked if it is MLTA, he said no if im not mistaken (he's from great eastern btw)

so, it's now like MRTA vs MLTA vs LifeInsurance

It's assigning your life insurance to your house.
I.e. if anything unfortunate happened, the pay out from your life insurance would go to the property first and the remaining towards your dependent.

MLTA as explained is termed insurance i.e renewal upon term expiry. MRTA is one shot at the time of purchase and non-transferable.

Dear forumers,

Would anyone be interested in an MRTA/MLTA that is transferable?

Its basically a product with the same low cost as a MRTA/MLTA but instead of assigning it to the bank, you can opt to assign it your beneficiaries first.

Traditionally, the MRTA policy would follow the bank, however this new product serves as an individual policy following the insured instead.

If you're getting a new loan and banks insist that you must have an MRTA/MLTA, you just need to assign the policy to the bank.

However according to Bank Negara ruling, that is optional.

If you have previously opted not to get MRTA from the Banks, you can opt to get it now.

Also, as it acts like an individual debt protection that can be extended to not just cover home loans but also overdrafts, car loans, or even personal loans.

I'll share more info should anyone is keen to know more.

Thanks.

Best Regards.

This post has been edited by Zarth: Mar 27 2008, 09:12 AM

Zarth, yeaps i would like to know more. can email me or something?

Zarth,

Sounds interesting. Kindly let us have more info.

Ok, here's some of the features and differences from MRTA/MLTA:

1. Transferable and Portable - policy stays with the owner no matter how many times you refinance.

2. Joint-life applicants, each have thier own policy. This allows any of the joint applicants the option to continue the policy should one passes away. Also they get to enjoy 20% Instant Savings off the normal premium. Joint-life applicants can be anyone, friend, brother, sister to business partners, Etc.

3. Flexible coverage term from 5 up to 40 years + 3 years construction period. Good for those who plan to settle their loan early. Option to continue on even if the loan has been fully settled.

4. Single premium - one time payment. Coming soon, 6-12 months Interest-free Instalment Payment Plan for PB, Citi or Maybank Credit Card holders.

5. Covers Death and TP Disability - sickness, natural or accidental. 24 hours Worldwide Coverage.

6. In the event of Death, sum assured is paid to beneficiaries. If the bank insist they should get it first, then just assign it over to them and revoke it once you have settled the loan. If there is a balance after settling the loan, it is paid to the beneficiaries.

7. Affordable and able to cover other types of loans such as overdraft, car loan, personal loan.

If anyone wants a quick quotation, just provide me with your D.O.B. , Loan Amount, Interest & Term.

Thanks.

Best Regards.

Not much different from normal Term Life Insurance