Choosing the right insurance plan for any type of coverage can often times be difficult. MPG Mortgage offers a broad range of insurance services including auto, home and health insurance, giving clients the confidence needed and the right advice for any insurance needs.
Our industry experts will advise clients on coverage opportunities and a suitable package be it for single health care coverage, Income Protection or home security coverage to protect their properties.
Buying a home is a huge commitment and will take the average homeowner up to 35 years to fully repay. Hence, it should be protected even when you are no longer around.
Providing a home for your dependent is a good thing, but if the home loan is not settled in full, it can turn into a burden for your loved ones in the event of death or total permanent disability (TPD).
It is with these unfortunate circumstances in mind that most mortgage officers offer mortgage life insurance policy to home buyers. In the event of death or TPD, the policy frees the borrower’s dependents from any debt as it is designed to pay off the remaining debt on repayment mortgages.
Just like any other life insurance policy, you need to pay a set amount of premium for a mortgage life insurance policy. If you pass away while the policy is in effect, the insurance company pays off your mortgage. Your spouse or beneficiaries can then live in the house debt-free without having to worry about making any mortgage payments.
Which mortgage life insurance do I need?
In Malaysia, there are two types of mortgage life insurance available – Mortgage Reducing Term Assurance (MRTA) or Mortgage Decreasing Term Assurance (MDTA) and Mortgage Level Term Assurance (MLTA).
However, MRTA and MLTA are often misunderstood. Which do you need as a homeowner?
MRTA is a life insurance plan with decreasing sum assured over time, and it used just to cover your home loan owed to bank. This plan is usually offered by the bank you are getting the mortgage from, as it is used as protection for the bank in case of misfortunes that stop you from servicing the loan.
On the other hand, 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. This is a personal plan, where you and your dependents are financially protected when you are no longer around, or have lost the ability to generate income.
Here are the major differences between MRTA and MLTA:
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