So you’ve read up on MRTA & MLTA and you’ve already made your decision based on our comparison between the two policies. Next step is do contact either your banker, or insurance agent.
Naturally, it is only appropriate that bankers will promote MRTA while insurance agents advocate MLTA. Despite these distinct differences, there are still a number of misconceptions surrounding these 2 policies.
1. MRTA is compulsory
a. MRTA is not compulsory. Bank Negara does not state this. However, home buyers are strongly encouraged to have some form of protection for future financial planning. Most banks also tend to offer a better loan package if you purchase an MRTA with them.
2. MRTA is non-transferable
a. It is, but not to another individual. You can transfer your MRTA to the next property you buy. However, you would need to sell your existing property to transfer it to a new home, and if the new property is more expensive than the remaining coverage, you would have to top up the balance. Always check with your local bankers to find out if it’s best to transfer the MRTA or just purchase a new policy.
3. All MLTA is term assurance
a. Most of them are. However, there are cases where MLTA come with whole life plans or investment-link insurance plans, but this comes with a higher premium due to the longer protection duration.
4. MRTA and MLTA coverage are insufficient
a. Basic MRTA and MLTA plans do not cover critical illness. However, most MLTA do come with the option of including a medical rider for critical illnesses. MRTA does not. If you have adequate medical insurance, MRTA might be the plan for you. However, if you have financial dependents and require extra protection, consider MLTA instead.
5. MLTA offers “free” protection
a. This conception is derived from the MLTA proponents that offer a guaranteed cash back at the end of the tenure. However, this differs from policy to policy. Also, consider the fact that MLTA can cost up to 10x more than MRTA.
So, how do you choose between MRTA and MLTA? Look into your financial objectives, overall insurance protection, number of financial dependents and your budget. Your answer will come to you.