MRTA and MLTA

Posted on: 2014-02-28

Mortgage Reducing Term Assurance (MRTA) and Mortgage Level Term Assurance(MLTA).

MLTA is a slight variation from MRTA 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.


Different between MRTA and MLTA :

 

MRTA

MLTA

Purpose

Protection

Protection, Saving & Cash Value

Protection

Reducing Protection throughout the loan tenure.

Protection is leveled throughout the loan tenure.

Transferability

Non transferable on New Purchase or Refinance. Premium will increase while age increases.

Transferable. One MLTA can be attached to Any Loan. Transferable on New Purchase or Refinance.                                                                   

Cash Value

Reducing Cash Value throughout the loan tenure. Normally is much lower than Premium, and drop to RM 0 at the end of loan tenure.

Fixed Cash Value (Guaranteed) throughout the loan tenure. Policy Holder will get back the paid premium in the future.

Nomination

Beneficiary is bank.

Beneficiary can be anyone.

Payment

Lump Sum Payment or financed into Mortgage Loan.

Payment Mode can be Annually, Semi Annually, Quarterly or Monthly.

Premium

Low

High

Example on premium*

One time RM 1,186.34

RM 607.20 monthly or RM 7,286.40 yearly or RM 218,592 throughout the tenure

Example if there is no death or TPD*

At the end of tenure owner will received RM 0

At the end of tenure, owner will received RM 218,592

Example if there is death or TPD*

Insurance company will pay the loan balance of RM 372k to the bank & beneficiary will received the home.

Insurance company will pay the loan balance of RM 372k to the bank & beneficiary will received the home plus RM 100k cash.



Disadvantages & Advantages on MRTA and MLTA :

MRTA's Disadvantages

MLTA's Advantages

* Protection decreases annually Floating BLR rate = may cause unsufficienty coverage & need continuous housing loan.

* Level Term Protection.

* No Case Value.

* Guaranteed Cash Value.

* Not Transferable To A New Property.

* Transferable To A New Property.

* Can't Help You Save on Loan Interest & Shorten Loan Tenure.

* Help You Save on Loan Interest & Shorten Loan Tenure.




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Source From: http://www.property.cc/khim-associates

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