Normally, this is what happen. After you buy a house, the mortgage officer will normally ask you to buy a hassle-free bank MRTA, single premium, and financed into the loan. You only pay a little bit extra per month, what a fantastic plan!
But are you aware that buying MRTA may not be able to directly protect your asset and your family?
If you purchase MRTA, the beneficiary is the bank. If any misfortune happens, the bank get the mortgage outstanding balance from insurance company (and now the bank is safe).
In short, bank MRTA is meant to protect the bank, you and your family are only being protected Conditionally.
Then what is the solution? Buying personal MLTA. It means Mortgage Level Term Assurance.
If you purchase personal MLTA, the beneficiary is your family. In case of any misfortune happens, your family will get insurance proceed equal to the value of the house. And the most important thing is that this insurance proceed is creditor-proof and will not be frozen.
What about the house? The house will still be frozen and subject to the same estate execution process anyway.
If your asset is less than your liability, your family at least have already got the cash from insurance. They can buy a new house now.
If your asset is more than your liability, your family get both house and the cash.
Does this make sense to you?
And the other wonderful thing is that if you finish your mortgage installment earlier and wanted to change to a bigger house. Your personal MLTA is portable to your new loan.
What is your choice? MRTA or MLTA ?
Want to know more on why i advise my client that way, you can email me your inquiry and i will get back to you as soon.
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