Mortgage Level Term Assurance (MLTA)
Basically there are two types of mortgage insurance available in the
market, 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. In a nutshell MLTA
offer level/consistent protection, allow you to buy/sell property using the
same MLTA protection & offer cash back and interest comparing to MRTA.
Also please note that most of the times, it is not compulsory to buy MRTA
from the bank that you get the housing loan with.
Benefits of MLTA
• Provides level protection for added security on your outstanding loan
amount
• Protects your outstanding loan in the event of Death or Total and
Permanent Disability
• Provides simple one time premium payment to cover the entire loan tenure
• Option to finance the insurance premium into the loan facility
The table below shows the 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 RM0 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 RM1,186.34 |
RM607.2 monthly or RM7,286.4 yearly or RM218,592 throughout the tenure |
| Example if there is no death or TPD* | At the end of tenure owner will received nothing. | At the end of tenure, owner will received RM218,592 |
| Example if there is death or TPD* | Insurance company will pay the loan balance of RM372k to the bank & beneficiary will received the home. | Insurance company will pay the loan balance of RM372k to the bank & beneficiary will received the home plus RM100k cash. |
|
Pro & Con |
MRTA Disadvantages • Protection decreases annually • Floating BLR rate = may cause insufficiently coverage & need continuous housing loan • No cash value • Not transferable to a new property • Can't help you save on loan interest & shorten loan tenure |
MLTA Advantages • Level term protection • Guaranteed cash value • Transferable to a new property • Help you save on loan interest & shorten loan tenure |
* Total Permanent Disable
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