When I asked others on their house loan insurance, most of them replied that they bought MRTA, because banker told them so.
When I mentioned about another type of house loan insurance, which is MLTA, they were stunned.
Are you just like those mentioned above, making decisions blindly based on input from banker? Have you done your homework properly?
Secret #1: Understand What Is House Loan Insurance
So, what is house loan insurance? And why do you need it?
When you are getting a house loan from the bank, bank would need to make sure that YOU pay off the debts regardless where are you (on earth/ heaven).
If your earning capability remain, you can afford to pay the monthly installment.
What if you lose your earning capability due to unforeseen circumstances (death, total permanent disability, critical illness)?
Here comes the purpose of house loan insurance.
It is to pay off your outstanding house loan when you are dead, totally permanently disabled or terminally ill.
Secret #2: Types of House Loan Insurance
There are two types of house loan insurance.
MRTA – Mortgage Reducing Term Assurance (bank normally sells MRTA)
MLTA – Mortgage Level Term Assurance
Let’s assume your loan amount is RM500k.
MRTA coverage starts with RM500k, and the coverage reduces over time because you have cleared part of the loan.
On the other hand, MLTA is more superior as the coverage is always level at RM500k.
Now that you have discovered the secrets on your mortgage insurance, how would you make your decision when buying your (next) property?
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