Most people will buy a mortgage protection insurance one way or another for the purpose of covering the loan if anything were to happen(death, disability or illness) to the buyer or owner of the property. Then…most people will do what most people would normally do, getting all their insurance needs for the mortgage from the banks. All because of convenience and lack of “knowledge”. As a leading expert in the financial advisor industry, I would like to share my knowledge about getting the best protection for mortgage insurance. It is understood that most bankers need to fulfill their quotas and sales target in order to make a living. However, as for me, I am an entrepreneur as a financial advisor, creating value and giving my best advice and expertise to my clients and friends is what I focus on.
So, Here we go. Why most bankers will make it sound mandatory for home owners to get MRTA(Mortgage Reducing Term Assurance) from them when actually there’s a better option call “MLTA(Mortgage Level Term Assurance)”? Because it is easy and straight forward without the need to explain unlike MLTA’s many benefits, and its cheap. (Remember, cheap things usually don’t come in a package, and its poor in quality). It is easy to sell since it is a mandatory product, it is part of most banker’s sales target. Ultimately, most banks make faster profit, by selling short term MRTAs that doesn’t even cover the whole loan repayment tenure. When time comes, one will need to buy additional MRTA in the future for the outstanding loan balance. Then again, the premium will be much higher due to age and also health related issues that comes with age. Having said that, this only benefits the banks most.
Last but not least, most banks will insist that you finance the MRTA premium into the loan to make it sound less burdensome in coming out a lump-sum of premium. But in actual fact, over the long run of serving the loan, the accumulated INTEREST charges will make the actual MRTA premium more expensive without you noticing.
This means, if for instance the owner of the property with mortgage passed away or permanently disabled, he or she will be claiming the agreed sum even when most of the loan has been paid off. In other words, with MLTA you can still have the excess money(sum insured – loan amount). With MRTA, due to its reducing term features (sum insured follows balance of loan), hence no excess cash
36Critical illness insurance is included whereas MRTA doesn’t have. What if the home owner is diagnosed with one of the 36Critical illness? with no MLTA, he or she will have to continue paying the loan.
Meaning, if a home owner wants to switch banks for refinancing purposes, he or she can transfer the existing MLTA to any banks without the need to purchase a new MRTA from the particular bank that was switched to.
After a few years of serving the loan and if the owner wants to reduce the sum insured of the MLTA, he or she can do so anytime with no cost. Hence, a lower premium. Additionally, one can also increase the sum insured whenever he or she wants to. That said, MLTA is like an asset. Whereas for MRTA, once purchased, it is unadjustable.
While we are paying the premiums for MLTA, throughout the years, premiums paid will be accumulated with interest returns of between 8 to 15% annually, over the long run of say on the 15th year, one can use the cash value in the MLTA account to settle the remaining balance of the loan, thus saving on paying more interest. After I show you the amount of money you can save with MLTA, it will shock you!
There you go, 5 very important benefits that will be worth your time and value for money paying for it. If you wish to know more about how MLTA can help secure your home loan, don’t hesitate to contact me for more information.