Question 1

What is the difference between MLTA and MRTA?

Accepted Answer

MRTA’s sum assured reduces with the loan balance, mainly pays the bank, and usually ends with the loan. MLTA’s sum assured stays level, the policy belongs to you, and it can continue after refinancing or settling the loan. MRTA is cheaper, MLTA is more flexible.

Question 2

Do I have to buy MLTA or MRTA when I buy a house? Can the bank force me?

Accepted Answer

There is no law requiring it, but some banks or loan packages make mortgage insurance a condition, or offer a better rate with it. The bank cannot force you to buy only from its chosen insurer, so ask what alternatives it accepts.

Question 3

Can I use an outside policy or ordinary term life instead of the bank’s?

Accepted Answer

Yes, if the bank accepts it. Many people use an outside MLTA or term life with enough cover, which is sometimes better value and fully owned by you. Confirm the bank’s requirements for sum assured, term and assignment.

Question 4

Can the premium be financed into the housing loan? Is that a good idea?

Accepted Answer

Yes, it’s common with MRTA and saves paying cash upfront. But the premium then accrues loan interest for many years, so you pay more than the premium itself. If you have the cash, compare the total cost of paying upfront versus financing.

Question 5

Should the sum assured match the loan? Should the term match the loan tenure?

Accepted Answer

Generally the sum assured should be at least the loan amount, and the term at least the loan tenure, so the loan can be fully cleared if something happens. If you want family protection after the loan ends, choose an MLTA with a higher sum or longer term.

Question 6

My spouse and I have a joint loan. Should we buy one policy each or a joint policy?

Accepted Answer

Both work. Separate policies can follow each person’s share of the repayments and pay out whoever is affected. A joint-life policy usually pays out on the first death and then ends, and may cost less. Decide based on each person’s income and share of the loan.

Question 7

If I sell or refinance the house, can I keep using my MLTA? Is there a refund?

Accepted Answer

MLTA generally stays with you after you sell, either as life cover or assigned to a new loan. MRTA is usually tied to the original loan, so refinancing may need new cover, and early termination may return a small surrender value.

Question 8

What happens to MRTA if I settle the loan early?

Accepted Answer

Cover usually ends once the loan is settled, since its purpose was that loan. Some MRTA policies refund a small unused portion of premium on early termination. Check your policy or ask the insurer.

Question 9

If I die, does the MLTA payout go to the bank or my family?

Accepted Answer

If the policy is assigned to the bank, the payout first settles the outstanding loan and the balance goes to your nominee or estate. If it isn’t assigned, the payout goes straight to your beneficiaries, who then deal with the loan.

Question 10

If the payout is more than the remaining loan, who gets the rest?

Accepted Answer

With MLTA, the balance after clearing the loan generally goes to your nominee or your estate. This is one advantage over MRTA: as the loan shrinks, the amount left for your family grows.

Question 11

Does MLTA cover critical illness and TPD?

Accepted Answer

Most MLTA and MRTA plans cover death and total and permanent disability. Critical illness is usually an optional add-on. If you worry about being unable to pay the loan after a serious illness, consider adding it.

Question 12

My home loan is Islamic. Can non-Muslims take it, and does it affect mortgage insurance?

Accepted Answer

Non-Muslims can take Islamic home financing and buy takaful mortgage cover such as MRTT or MLTT. Islamic financing sometimes requires takaful cover, so ask the bank whether conventional MLTA is accepted.

Question 13

I never bought MLTA when I took the loan. Can I buy it now?

Accepted Answer

Yes. You can buy MLTA or term life at any time based on the outstanding loan and remaining tenure. The premium will be higher than it would have been, and you will be underwritten again, so the sooner the better.

MLTA and MRTA: 13 questions to ask before you buy a house