MRTA ( Mortgage Reducing Term Assurance )

What is MRTA?

It is an insurance policy that has money protection for property loan borrowers and their families. Specifically, it helps settle outstanding loan amounts within the event of death or  total disablement (TPD) of the borrowers.

Why would you need it?

This MRTA is basically a protection mechanism for all purchasers with house loan, and particularly for households with sole breadwinners.

Generally, within the event of untimely death or incapacity of a home loan borrower (especially if he/she is that the sole breadwinners),the worst problem facing surviving household members is their ability to pay off the outstanding loan. In several instances, the surviving members of the family might even have to disposed the property at below market price just to pay off the outstanding loan.

By accepted for MRTA, house benefiaciary won't be left with such burden as a result of it covers half or all of the unpaid portion of a housing loan.

How do you apply for it?

In Malayisa, home loan borrowers do not need to go out of their way to find an MRTA provider because it is usually packaged as part of the loan application process. Borrowers only be required to pay a single premium throughout the entire duration of the policy. 

Important issues

Like any other insurance policies, MRTA has a specific insured amount as well as policy duration. Bear in mind that in the event of death or total disablement (TPD) of borrowers, it would pay off only the amount that is covered, within the time, as dictated by the policy. It does not pay for everything that the insured owes to the bank.

Due to the above reason, house loan borrowers are generally suggested to purchase MRTA based on your specific necessities (instead of simply going for the cheapest policies available). For sole breadwinners, buying maximum coverage is especially recommended despite the heftier premium, because your families are more at risk should anything happen to you. For households with multiple income earners, you may consider choosing a policy with lower coverage.