In the context of Malaysia, "MRTA" and "MLTA" are terms related to insurance products associated with housing loans. Here's what each term refers to:
-
MRTA (Mortgage Reducing Term Assurance): MRTA is a type of insurance that provides coverage for your outstanding housing loan amount in the event of your untimely demise or total permanent disability. If you pass away or become permanently disabled during the loan tenure, the insurance will pay off the remaining balance of your housing loan, ensuring that your family or dependents are not burdened with the loan repayment. The coverage amount gradually decreases over time, in line with the decreasing loan principal.
-
MLTA (Mortgage Level Term Assurance): MLTA, on the other hand, is also a type of insurance associated with housing loans. However, unlike MRTA, the coverage amount remains constant throughout the policy term. In the event of your death or total permanent disability, the insurance payout from MLTA will not decrease with the loan principal. This means that if you've paid down a significant portion of your loan, your beneficiaries would receive a higher payout compared to MRTA, which decreases over time.
In summary:
- MRTA: Provides coverage for the outstanding housing loan amount, with the coverage gradually decreasing over the loan tenure. It offers a cost-effective way to ensure that your loan is paid off in case of unforeseen events.
- MLTA: Provides coverage that remains constant throughout the policy term, regardless of the outstanding loan balance. It offers more consistent coverage, especially in cases where you've significantly paid down the loan principal.
When deciding between MRTA and MLTA, it's important to consider factors such as your loan amount, loan tenure, budget, and your overall financial situation. Some individuals may prefer the decreasing coverage of MRTA due to its lower premiums, while others might opt for the consistent coverage of MLTA to provide their beneficiaries with a larger payout.
It's recommended to carefully review the terms, conditions, and costs of both MRTA and MLTA before making a decision. Additionally, seeking advice from financial experts or insurance professionals can help you make an informed choice based on your specific needs and circumstances.