Different between MRTA and MLTA

Jan 13, 2011 10 Comments by

The Purpose of Having MRTA and MLTA

Your house is probably the largest investment you will ever make in your life. It will become even more precious when you turn into a happy home filled with wonderful memories of your growing family. With a MRTA or MLTA you will be able to secure your precious home for your loved ones. It prevents serious financial liability from falling on your family should something happen on you such as death, total permanent disability or critical illness (Normally MRTA not include this benefit).

In the event of Total Permanent Disability (TPD) or loss of life, MLTA or MRTA plan will ensure repayment of your outstanding mortgage in the event of Total Permanent Disability (TPD) or loss of life. Rest assured that your ongoing loan repayments will not financially “burden” your loved ones.

1) Mortgage Reducing Term Assurance (MRTA) or sometimes call Mortgage Decreasing Term Policy

As you can see from the Chart 1.1 below, the coverage of MRTA will reduce annually from RM500,000 to zero at the end of the loan tenure. This mean that if anything happened in this period the insurance company only payout the claim according to that year coverage.  Please contact our consultant to fill out more.

Chart 1.1: MRTA vs Loan Tenure

 

Example 1:

* Loan Amount: RM 500,000.00
* Loan Tenure: 30 years
* Outstanding loan amount (at point of death / TPD): RM400,000.00

Chart 1.2: MRTA vs Outstanding Loan (500K)

 

Example, for the above cases, when the Insured passed away or Total Permanent Disable (TPD) at 11th year with a outstanding of RM250K as shown in Chart 1.2, the insurance company will payout RM400k to the lender/bank and the remaining RM20K if any to the nominee (s) of the Insured (Assumed that the coverage is RM420K that time). Noted: (Different Insurance company will have a different schedule of TPD claim payment).

2) Mortgage Level Term Assurance (MLTA)

From  the chart 2.1 below, the coverage of the insurance remain at RM500,000 all time until  the end of the loan tenure. This mean that if anything happened in this period, a amount of RM500k will payout by the insurance company. Please contact our consultant to fill out more.

Chart 2.1: MLTA vs Loan Tenure

 

Example:

* Loan Amount: RM 500,000.00
* Loan Tenure: 30 years
* Outstanding loan amount (at point of death / TPD): RM400,000.00

Chart 2.2: MLTA vs Outstanding Loan (500K)

 

For the above cases, when the Insured passed away or Total Permanent Disability (TPD) at 11th year with a outstanding of RM400K, the insurance company will payout RM400k to the lender/bank and the remaining RM100k to the nominee (s) of the Insured. Noted: (Different Insurance company will have a different schedule of TPD claim payment).

3) Difference between MRTA and MLTA

As refer to below chart 3.1. It clearly shown the different between MRTA and MLTA. Each serve different purpose depend on your financial planning. If you not planning to do refinancing or purchase another new property in the future MRTA is seem more suitable for you and also for senior citizens (Due to higher insurance charges on age in MLTA). If you are planning to do refinancing or purchase another property again, MLTA is more suitable for you but beware that most of the bank’s MLTA can’t transfer the policy to you after you terminate the loan account. Please contact our consultant to fill out more.

Chart 3.1: MRTA vs MLTA

 

The mortgage and financial consulting services are offered to you FREE of charge without any obligations. Kindly contact us or email to consultant@malaysialoan.com.my if you need any enquiry. Thank You.

Features, Insurance, MLTA, MRTA

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10 Responses to “Different between MRTA and MLTA”

  1. Zie says:

    Let’s say the insured passed away or Total Permanent Disable (TPD),so the family came and verify to the bank.The bank ask for proove that the insured has taken the MRTA,what the family has to show???

    • Malaysia Loan says:

      Different bank/ insurance company might have different required documents here are some documents you might need..

      1. TPD Claim Form from the Bank or Insurance Company
      2. TPD Medical Certificate Form
      3. Certified True Copy (CTC) Employment Termination Letter, if applicable
      4. CTC Life Assured’s NRIC
      5. CTC Claimant’s NRIC (if different from Life Assured)
      6. CTC Clinic/Hospital Consultation Card
      7. CTC EPF Withdrawal letter, if applicable
      8. CTC SOCSO Offer Letter/ SOCSO “Keputusan Jemaah Doktor Mengenai Keilatan”, if applicable
      9. CTC Police Report (accidental cause)
      10. Newspaper Cutting (accidental cause), if applicable
      11. Original Policy Contract

  2. Pheng says:

    So if I am planning to get a 2nd house, how can I continue to use the existing MLTA?

  3. Za'onah says:

    Me and husband bought a house in Selangor on 2005. We bought MRTA from RHB Bank HQ which is insured 50% – 50%(me and husband). Now we leave at Kangar, Perlis and we rent our house. we had a problem when our S&P and all documents related to the house was destroyed by flood on November 2010. A police report only made by our head of neighbourhood, me and husband didn’t made any police report because the bank (Kangar branch) claims that they have record on their systems. But now, I’m worried if something happen. What should I do?

    We are planning to buy our 2nd and 3rd house. The 2nd maybe we bought on cash and loan for the 3rd. Can we continue to use the existing MRTA without selling the 1st house? and could you please to advice me how to insured the house which be bought by cash?

    Thank you and immediate reply really appreciated.

  4. Leong says:

    Hi, My want to buy my 1st house from developer

    * Loan Amount: RM 500,000.00
    * Loan Tenure: 30 years

    I still do not know the house for own stay or will sell off.

    Please advice for take the MLTA or MRTA.

    And what is the different buy from bank and own issurance agency?

    • Malaysia Loan says:

      Hi Leong,
      Normally Bank is under a master policyholder so the premium will be cheaper but hardly to get transfer to your name when you sell off the property or refinance to other bank.
      If you bought it directly from insurance agency then the policy owner will under your name and you have the full control on your insurance plan. (Recommend for investor or people who want to purchase another property or refinance in the future)

  5. Mus says:

    Hi,

    Need advise, i’m buying a new house. Taken MTRA for nly first 5 years. I’m planning to take MLTA for the next sequence year to cover my loan as my MRTA isn’t enough to cover my loan if something happen to me in second year…so, there is 2 option for MLTA, one is from Hong Leong Bank and anothor one option is upgrading my Life insurance (curently with prudential).

    can u please advise which one is better? i mean easy if i need to transfer it when buying a new house or refinance?

    TQ

    • Malaysia Loan says:

      Hi Murs,
      If u planning to refinance or purchase other property unit in the future, i would suggest you that u can upgrading your Prudential Insurance. (Must be Investment Link Policy better)

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