Hi:
Here I'll roughly explain about MRTA, MLTA and Life Insurance. Hope this info will help those newbies to get a right idea about what they really need.

MRTA
One lump sum, cheap (If the premium is not integrated into the loan).
Non-transferable. If you refinance your property, you have to buy a new one.
It will be a good deal if you have cash to pay for the MRTA and you don't intend to refinance your property before you settle the loan.
No surrender value.

MLTA
You are paying more premium if compared to MRTA, but after you settled the loan, you can get back your premium paid, together with some interest. Looks like a very nice plan but I don't suggest my client to take this plan. To know reason why, e-mail me at cheahyang_0@hotmail.com

Life Insurance
You pay the premium on annual basis. Premium is higher than MRTA. However, if you integrate your MRTA into the loan, MRTA will cost higher.
Transferable. No need to buy a new MRTA when you refinance your property.

Normally I don't suggest decreasing term to my clients. Even though the loan outstanding is decreasing, but normally your other commitments is keep on increasing throughout your lifetime, especially for those businessmen and investors. Ask yourself, does your assets value and life value is increasing or decreasing over your lifetime? Unless you're telling me that the property you want to buy is the one and only commitment you have in your lifetime, otherwise I don't see a reason why life insurance is not meant for you.

Furthermore, it is advisable to buy life insurance when you're young and healthy. Some more it will cost lesser than you buy it later.

Any questions you can send an e-mail to cheahyang_0@hotmail.com . I'll try my best to solve your problems. Thanks!

It's simple. If you afford to pay extra money, why not apply a shorter tenure home loan to save your money. What's the return rate that MLTA can giving you? Effective rate will be most probably 3%p.a to 4%p.a only. Don't you think it's better use your extra money to pay the loan which charge you 4.85%p.a (ING Fixed Rate Home Loan)?
Maybe you can say your current home loan charge you only 3.25%p.a (BLR-2.3%) and you might still have some gain with MLTA. However, don't forget that this loan interest rate is depending on fluctuate BLR, once the BLR rise up, your home loan interest rate will increase as well. I don't think BLR will stay at 5.55% for the following 20-30 years. To view historical BLR, visit http://fortunesense.blogspot.com/2008/12/m...-blr-since.html .
If you say you want to use the extra money for investment which can potentially giving you 6-8% return annually, maybe I will agree with you. But for MLTA, I don't think so.
This is my own opinion, I don't say it's 100% correct.
If you have a second opinion, please share with me. Thanks!

Hello:
I don't think I'd missed out the purpose of MRTA. I just saying I'll not go for MLTA. Life insurance is an alternative to MRTA. My idea is, if you don't have enough cash to pay for MRTA, it's not a bad idea to take life insurance to protection your loan instead of integrate your MRTA into loan. Result can be the same. If anyhing happens to you, insurance company will pay money to your family member to offset the loan. Don't forget, your property will be leaving to your family if anything happens to you. So buying MRTA or life insurance makes no big difference in most situation. As long as what you can leave to your family is a property, not a debt.

You seem to misunderstand what I meant.

Let me make an example.
If I have RM1000, how do I allocate the money? Options are at below:
1) RM750 for loan, RM250 for MLTA.
2) RM850 for loan, RM150 for MRTA / Life Insurance
3) RM750 for loan, RM150 for MRTA / Life Insurance, RM100 for Investment.

I definitely won't go for option 1. MLTA is actually MRTA + Saving. The extra RM100 I use to save here, will always giving me a return rate which is lower than my loan interest rate. Not worth it. Remember before you start a saving (except for emergency fund), please settle your loan first. Otherwise your money accumulated will become less.
To be smarter and safer, I'll go for option 2, which can shorten my loan tenure. Settle this commitment earlier then I can continue with my other plans.
If I'm the one who can take risk, I can also go for option 3. As long as I have the confident to ensure that my investment return rate will be higher than the home loan interest rate. However, this kind of thinking is not recommended by consultants.
If choose option 3, you may be a winner or a loser. But if you choose option 1, surely you'll be a loser. Coz you don't know how to manage your money well.

Hey:
You still don't understand. Either taking MRTA or Life insurance for the loan has nothing to do with family fund. You should long ago prepared proper insurance for family fund. And I'm not telling you to take previous Life Insurance (which is the family fund you meant) for this loan protection.
I mean if you want to buy a protection for your loan, you can choose either MRTA or decreasing term, depends on which can save your cost. I NEVER ask you to use previous life insurance for this loan. No Insurance Agent will make this stupid mistake.
My problem or your problem? You seem can't understand what I said.

I thought MLTA is normally refer to life insurance with return (term life + saving plan). Seldom heard someone use MLTA to refer life insurance without return.

For RM150K loan, tenure 30years, assume fixed interest 4.85%p.a (lowest in town), The monthly payment will be RM792.

If I give you a RM150K term life (not decreasing term), will cost about RM72/month. Means money to save here is RM83/mth (RM155-RM72).

Using Financial calculator, the interest rate for the saving is around 4.5%p.a, which is lower than the interest rate of the home loan. Means the RM83/month will lose 0.35%p.a for 30 years.

Let say you add the RM83 into your installment, actually in 24.5 year you can settle the loan already. In another word, you should apply 25 years loan and not a 30 years loan.

Let say you apply MRTA (pay by cash) or life insurance (term life + decreasing term), your cost will be less. Means you can shorten the loan tenure even more.

So do you understand why I don't prefer MLTA (with return)?

To : b00n
Sorry that I didn't read the previous posts. In fact I didn't mean to post so much things at here also. Now I just realise I shouldn't say not to recommend MLTA, but I should have say not to take any MLTA that has a saving component. Does it correct my sentence? Or how should I say to make it clear?

To : Onnying88
From the example you given, I feel something not quite right. From your previous post you said your MLTA has a return of RM63579 after 30 years (4.5%p.a compound interest rate from calculation). Then your last post says RM49776 after 25 years (5%p.a compound interest from calculation). Why compound interest rate for 30years is less than 25years? Do you mind refer back your quotation? RM49776 has a compound interest of 5%p.a (which is higher than 4.85%p.a for the loan), of course you can see some profit here.

Second, is this a participating policy or non-participating policy? If this is a participating policy, remember that the return is non-guaranteed. It could be more or be less as well. Hope that the value you provided above is not from the scenario with the higher return (which is not likely to be happened in most of the time).

Third, You may be right. Current loan with BLR-X% is much cheaper than fixed rate home loan. The reason is simple, you take the risk of BLR, therefore bank offer you a cheaper rate at the moment. However, don't forget BLR will fluctuate. If BLR going up you're going to pay more money for the interest and your loan tenure will be extended. If you prefer to take the loan with BLR-X% and you believe BLR will stay below 7% for the rest of your loan tenure, you can just go ahead.

Yes, you can always do a refinance later, but are you sure you can get a rate that is lower than current rate? Moreover, refinance involving cost and it will always increase your outstanding. Whether it can save your interest is unknown.

Hi:
I'm Gavin Lim from ING. If you need a quotation from ING, please send your details (date of birth, gender, occupation, smoker/non-smoker, loan size and loan tenure) to cheahyang_0@hotmail.com and if you have any inquiry please let me know as well. Thanks!