Mortgage Reducing Term Assurance (MRTA) – review

Mortgage Reducing Term Assurance

MRTA is a reducing term life assurance that provides home financing borrowers with financial protection in the event of premature death or total permanent disability.

MRTA and MLTA are financial terms related to insurance, a specifically mortgage insurance policies.

What is MRTA ?

It is a type of insurance designed to protect borrowers and their families from the financial burden of an outstanding mortgage loan in the even of the borrower’s death or permanent disability during the mortgage term.

  • MRTA provides coverage for the outstanding balance of the mortgage loan as the borrower pays off the mortgage over time the sum assured also reduces in tandem with the outstanding loan amount
  • In the unfortunate event of the loan borrower’s death or permanent disability, MRTA will settle the outstanding mortgage loan amount relieving the burden on the borrower’s family or dependants.

Benefits and features of MRTA

  • Financial security – Provides peace of mind ensuring that the family’s can keep their home even if the borrower passes away or become permanents disability.
  • Affordability – Usually more affordable compared to other life insurance policy’s making it accessible to boarder range of borrowers.
  • No cash value – Its a pure protection plan without have a savings or investment component, it serves its purpose solely as mortgage protection.

Why do you need it?

This home loan life insurance is essentially a protection mechanism for all people with mortgage, and especially for household with sole breadwinner.

Generally, in the event of untimely death or disability of a housing loan borrower, the greatest problem facing surviving household members is their ability to pay off the outstanding loan.

In many instances, the survive family members may even need to sell off the property at less-than-competitive price just to pay off the outstanding amount.

Surviving family members will not be left with such burden because it covers part or all to the unpaid portion of a housing loan.

MRTA is  a life insurance plan with decreasing sum assures over time and it used just to cover your home financing.

There is a personal plan where you and your dependents are financially protected when you are no longer around or have disability to generate income.

Mortgage Level Term Assurance (MLTA) 

MLTA is another type of mortgage assurance provides level coverage throughout the policy term, meaning the sum assured remains constant.

  • MLTA offers coverage for a fixed amount throughout the policy term and it is not directly tied to the outstanding loan balance. The payout from MLTA remains the same regardless of the remaining mortgage amount.
  • Offers more flexibility as the payout can be used for purposes other than setting the mortgage loan. The beneficiaries can use the proceeds to cover others financial obligations or maintain their lifestyle.

On the other hand MLTA are slight variation from MRTA and offers an alternative for borrowers who looking extra protection plus savings by life insurance policies.

MLTA is best for an extra financial protection in the worst case scenario as it also has a cash value at the end of the policy. This is best for those who have many financial dependent like children and spouse.

Benefits and features of MLTA

  • The level coverage provided by MLTA ensures that the beneficiaries receive the same payout regardless of the outstanding mortgage amount
  • The payout from MLTA can be used for various purposes providing the beneficiaries with financial flexibility to address their needs
  • MLTA does not have a savings component

Its importance to note that the specific terms and benefits of MRTA and MLTA can vary depending on the insurance provider, Before deciding on any insurance policy, its essential to carefully review the policy documents, terms and conditions to ensure it aligns with your specific needs and circumstances , Additionally it’s advisable to consult with a financial advisor or insurance expert for personalised guidance.

Which mortgage life insurance do I need?

In Malaysia, there are two types of life insurance available – Reducing Term Assurance (MRTA) or Decreasing Term Assurance (MDTA) and Level Term Assurance (MLTA).

visit life insurance advisor