Are Your Loans Protected?

Have you ever come across a thought. . .
What happen to my housing loan if one day I suddenly leave this world or suddenly become a total disability person? Do my family just own the house instead of continue pay the loans? Sorry to say, your family will have to continue serve the mortgage if the loan package not including any protection.

Buying a home is a huge commitment and could take average homeowners up to 35 years to settle loan payment. Providing a home to your family, or your dependent, is a noble and responsible thing to do. But have you ever thought that a home loan could also turn into a huge 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 any event of death of TPD, the policy frees the borrower's dependents from any debt as it is designed to pay off the remaining debt on the mortgage loan.

Similar to 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 loved ones can then live in the house debt-free, without having to worry about making any loan 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? The table below is a comparison of two policies.

At this Point, You may ask how much do I need to pay?

The premium is subject to your age, loan amount, and loan tenure. The basic rule of thumb is that the older you are and the higher the loan amount, the higher the premium you will have to pay. Similar to life insurance, if a person is diagnosed with a certain illness, the insurance company has the right to reject or increase the price to cover extra loading in premium.

Take for Example:

* These figures are used as reference as the interest rate will differ from insurer to insurer.

Now, Why should you buy MLTA over MRTA?

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, plus returns on the premium.

In a nutshell, MLTA offers level/consistent protection, allow you to buy/sell property using the same MLTA protection & offer cash back and interest comparing to MRTA.

MRTA's Disadvantages:

• Protection decreases annually Floating BLR rate = may cause insufficiency of 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's Advantages:

• Level Term Protection
• Guaranteed Cash Value
• Transferable To A New Property
• Help You Save on Loan Interest & Shorten Loan Tenure

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, if the banker tell you so please get in touch with me. We can arrage an appointment for the matter.

Above article is adopted from iMoney and Property.cc.

Contact information:

Name: Tony Ngu

Contact: 011 1058 8118 (Call/Whatsapp/Message)

Email: tonyngu2628@gmail.com

Book an appointment and see how our plan can benefit you today!