Banks usually offer housing loans within 30 to 35 years for you to own a dream home. In addition to home loans, the bank also offers home protection policies such as MRTA, MLTA, MRTT and MLTT to protect their interests if the borrower dies or suffer from permanent defects (Total Permanent Disability/TPD) which causes the borrower to be unable to repay the loan. This article will explain everything you need to know about these four housing loan insurance.
MRTA vs MLTA vs MRTT vs MLTT: Which One Is the Best Home Insurance Policy for You?
It’s not necessary to acquire MRTA, MRTT, MLTA, or MLTT protection when purchasing a home. However, if you don’t have this mortgage protection coverage, your family members would have to pay your housing debt in the case of something bad happening to you, including death or total and permanent disability (TPD). After your death, if your family does not maintain the instalment payment as usual, it’s likely that the bank will put your house up for auction.
Therefore, it is advisable to have any of this mortgage insurance policy To be prepared for any unexpected situation. Here are four types of life protection for your home or mortgage loan including the definition of MRTA, MRTT, MLTA and MLTT for your guidance and reference:
1. Mortgage Reducing Term Assurance (MRTA)
The MRTA, also known as the guarantee of mortgage reduction periods only financing debt surplus. For example, if the house is purchased for RM300,000 and after seven years, the loan remaining is about RM230,000. If the owner dies or has a permanent defect (TPD), the insurance will only pay the remaining loan remaining RM230,000 and the house will belong to the heirs.
However, family members or beneficiaries will not receive any excess payments as they are not included in this policy. Payment of MRTA protection is paid at the beginning of the policy and usually the cost of the MRTA is influenced by three factors such as the age of the borrower; Housing Loan Value and Housing Loan Loan.
2. Mortgage Reducing Term Takaful (MRTT)
MRTT or Takaful The period of mortgage reduction offers more similar policies and is not much different from the MRTA, what distinguishes these two policies using Islamic financial takaful. In a simpler sense, MRTT is a takaful version for MRTA. Just like the MRTA, it offers only debt balance financing, and payment for MRTT protection also needs to be made at the beginning of the policy.
3. Mortgage Level Term Assurance (MLTA)
MLTA or guarantee of this mortgage level allows the nominee or beneficiary to obtain the remaining residential loan repayment. For example, your MLTA Protection Plan is worth RM300,000 and an unexplained housing loan balance of RM200,000.
During the claim process, the MLTA policy will pay RM200,000 to the Bank to settle your home loan debt and a remaining RM100,000 will be given to your family members who have been named Benifisiari (nominee).
In line with the protection offered, you will have to pay for a higher premium than the MRTT. In other words, you will have to pay the same amount on a monthly installment to the insurance company from the first year to the expiry of the payment period. In terms of cost, the cost of MLTA depends on factors such as the amount of protection, the duration of protection and the age of the borrower.
4. Mortgage Level Term Takaful (MLTT)
If the MRTT is a takaful version of the MRTA, the MLTT (or Takaful Mortgage Level) is a takaful version of MLTA. In other words, it offers the same protection as MLTA but in a shariah -compliant version. Just like MLTA, MLTT Takaful Insurance pays any surplus insured directly to the policy owner or beneficiary (nominee) in the event of a claim.
Comparison of MRTA vs MLTA vs MRTT vs MLTT
To decide whether you need to choose MRTA, MRTT, MLTA or MLTT, it depends on your needs. Here are the differences and similarities between the four policies for your reference:
|Coverage||Death and Permanent Disability||Death and Permanent Disability||Death and Permanent Disability||Death and Permanent Disability|
|Types of Coverage||Mortgage life insurance||Life insurance||Mortgage life insurance||Life insurance|
|Payment Policy||Payment is made in one lump sum at the beginning of the plan||Payment is made in one lump sum at the beginning of the plan||Payments are made monthly according to the plan period||Payments are made monthly according to the plan period|
|Total Coverage||Decreasing over the planned period||Decreasing over the planned period||Remains the same for the duration of the plan||Remains the same for the duration of the plan|
|Payment Protection||Made directly to the bank or financial institution that has given the housing loan||Made directly to the bank or financial institution that has given the housing loan||Depending on the outstanding amount, directly to the bank. The excess payment will be made to the beneficiary.||Depending on the outstanding amount, directly to the bank. The excess payment will be made to the beneficiary.|
|Konvensional atau Takaful||Konvensional||Takaful||Konvensional||Takaful|
Basically, MRTA and MLTA are conventional protection while the MRTT and MLTT are takaful insurance coverage. You can choose the best home insurance and appropriate for you depending on your situation. For example, if you are a family head with a lot of dependents, you can consider MLTA or MLTT because if something happens to you, the beneficiary can earn money to continue living as usual.
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