Hi,

I know a lot of loans come with the bank requiring the borrower to buy MRTA. The purpose is so that if something happens to the borrower, then the MRTA will payoff the outstanding loan. But I would like to find out if there are other alternatives to buying MRTA. Here are my questions.

1. Over the course of a 30 year loan, is MRTA cheaper or Term Life cheaper?

2. Is it possible to substitute MRTA with Term Life or Full Life insurance? If yes, how? Any conditions to do this substitution?

3. Could the substitution be done for Home mortgage as well as Commercial Mortgage?

4. Is MRTA refundable if the mortgage is settled early?

Thank you.

1. Over the course of a 30 year loan, is MRTA cheaper or Term Life cheaper?

This is just a guess...Yes i do think MRTA is cheaper. One reason is because its under a master policy (there is no individual insurance policy) from bank, therefore its consider a type of umbrella insurance. However the coverage might be different. Some life insurance comes with protection for 36 Dread Disease while MRTA does not has such coverage.

2. Is it possible to substitute MRTA with Term Life or Full Life insurance? If yes, how? Any conditions to do this substitution?

Yes. Just buy life insurance of the protection/coverage which is same amount with your loan amount. You might want to reduce the coverage over time so that it will "behave" like a synthetic "reducing" term insurance

3. Could the substitution be done for Home mortgage as well as Commercial Mortgage?

Sure... most important is the coverage. X matter its a house or commercial property. The logic is u can also "create" your insurance for any assets u want to buy, eg luxury car? this can be done by buying the life insurance policy of the same amount of your loan. This is additional info, if u x get it.... forget about it.

4. Is MRTA refundable if the mortgage is settled early?

This is another guess. Yes.... this is because MRTA is paid full at inception, its just that its lumped into your borrowing. Therefore for any "unused" premium will be paid back if u settle early/refinance.

Thank you for explanation.

This post has been edited by simplesmile: Dec 30 2008, 10:00 AM

Take a look at this existing topic: http://forum.lowyat.net/index.php?showtopic=410824&hl=MRTA