Yes, if you paid lump sump up front. Usually there is cash value within the tenure. Anyway, you can check from the policy.

Hmm, why get MRTA+MLTA? A MLTA should be good enough right?

It depends on the features of the MLTA.

Hmm, example, those MLTA with return, the premium for it is usually higher than those without return. Usually i will focus on the coverage rather than the return. Hence a male age 30 non smoker, can get approximate 390k level death/tpd coverage for only RM 125 per month.

Oh.. now i get it. To get higher loan amount and better loan offer

This post has been edited by MaxWealth: Jun 5 2012, 08:44 PM

Hi, here is my humble opinion on MLTA or MRTA. It might be wrong and please correct me if so.

1st of all, the difference of MRTA vs MLTA is the trend of the coverage.

For MRTA, the coverage reduces with time.
Usually, there is a reducing rate for the coverage and the coverage term. It is important for us to ensure the coverage term to be as per our loan tenure and the reducing rate to be slightly slower than the BLR-X%. So that the coverage provided is always equal or slightly higher than the outstanding loan.
When BLR increases too much, we should review our montly installment as well as MRTA coverage so that we can settle our loan within the loan tenure and without paying extra interest. This can ensure our coverage is adequote to cover outstanding loan.
**Friendly reminder: BLR increase will increase the total cost of the loan (more interest paid) as well as the MRTA cost (if we finance into the loan)

For MLTA, the coverage remains level with time.

Hence, for sure, MRTA has lower cost of insurance. If budget is tight, MRTA is the best solution. You can consider MRTA from insurance company (reducing term) but i am not sure whether the cost is lesser than MRTA from bank or not. Or you can pay one lump sum.

If you finance into loan, the cost should be RM62.20 /mth assuming BLR remains at 6.6%
If you pay one lump sum, then the cost should be RM 35.33 /month

However, the cost above is for RM 333k coverage only.

So, let's not put coverage aside as the amount of premium you paid ensure a level coverage compared to reducing coverage.

The excess coverage could cover for
1) Excecution fees, legal fees or stamp duty for property transfering
2) family income replacement if insured is not having a lot of personal insurance (example, for critical illness claim for personal life insurance, insured or family member might exhausted the insurance money and left no fund to replace the income if the insured deceased)

I am very sorry because i am too tired. I am not sure i reply accordingly or not.

Anyway here are the benefits of MLTA compared to MRTA ( that might justify is the extra money paid worthy)
(1) level coverage as mentioned above

(2) transferable to next property.

What is so good about can transfer to next property?
a) When we go older, it is hard for us to subscribe for insurance due to health issue. Majority of people having acid uric, high blood pressure, high cholesterol etc. Hence, it is not easy to be covered by insurance. Furtheremore, you might be buying RM 300k property now. In the future, when you are buying RM 1mil property, the underwritting process is even strict.
b) Now you can buy RM 390k death/tpd coverage with RM 125 per month. 15 years later assuming you want to get RM 390k , you need to pay RM 275 per month.

(3) you can add in 36 CI coverage. Most mrta doesnt add in 36 CI coverage

(4) potential return. However, it is non guarateed. Some company projected it at 6-7%, some at 9%. Hence, i seldom mentioned about the return. If i have extra fund, I rather pump extra fund into loan account to save the interest. What i mean is, there are 390k MLTA with RM 125 per month, and there are also 390k MLTA with RM 250 per month. Of cause, RM 250 per month will have more fund value after say 20 years because you pay more. If the actual performance is > BLR-2.4, then it is worthy because you gain profit. But who can guarantee it? If the BLR increases, what i pay extra to the loan account save more interest.

Friendly reminder: There are MLTA with return and there are MLTA without return. Some uses participating plan as MLTA and the premium for this kind of plan is way too high.

Do discuss more. Sorry if it is not clear as quite tired already.

Hi, in my humble experience,

MRTA from bank (where insurance company as the service provider, and bank as the intermediary. Bank do get paid by insurance company by promoting insurance plan. Besides that, by financing the MRTA into loan, bank gain profit as they loan extra to the borrower), after settle the loan, they will need to assign back to the owner.

It is the owner decision on whether they want to continue or not.

Most of the time, many borrower just get maybe 5-10 years of MRTA only just to qualify for the loan. Hence, the coverage is very minimum. Most of them do not even know that they can assign it for another property. Anyway, since they opt for 5-10 years, there is nothing much coverage left for another property. Hence, as general, we say it is not transferable.

Assuming a borrower, age 30 male, get a 30 years RM 500k MRTA which matches the loan tenure. And assuming he settle the loan after 15 years. That means he has 15 years coverage remaining. The coverage at year 15 might be RM 300k (it is not half)

So, if he buy a RM 300 k property, i suppose he can use the same MRTA for the new property.

However, what owner must make sure, the reducing rate is it slower than rate of outstanding loan reduces. So, we might need to consider a few factor.
1) BLR at that moment.
2) Bank package at that moment. I believe that few years back, the interest rate is like BLR+x%

Furthermore, due to inflation of currency or appreciation or property, most likely we will buy a property with a price higher than our previous property. So, assuming he is buying a RM 1mil property. We need to top up another 700k MRTA for it.

At age 45, for a RM 700k coverage taken, he need to go for full medical examination, urine full examination and blood test for HIV.

However, if he has a RM 500k MLTA since 15 years ago. He need to top up RM 500k coverage. He need to go for full medical examination only.

Assuming he is age 46, RM 700k sum assured requires him to go for blood test and electrocardiogram apart from the above requirement.

Age 46 RM 500 k need full full medical examination.

So, borrower will face such challenges in getting insured at older age.

However, if budget is a concern, and the property is for own stay, MRTA is most suitable though.

P/S: MRTA/MLTA is actually life insurance where we use for mortgage debt cancelation purpose.

So, MRTA and MLTA have their own advantages and disadvantages.
There is no wrong chosing which as mortgage coverage. It is just depending on which is more suitable for that particular individual.

P/S: There are many kind of life insurance that can be used for MLTA. Some proposed endownment, participating plan, term or investment linked. The cost decreases from endownment to investment-linked.
For what i think and calculate, i prefer getting term or investment-linked as MLTA even if that person could afford high premium endowment as MLTA