MRTA - Protecting the family home

You need to guarantee that the dream home you have just bought for your family remains in their possession in case anything happens to you

MRTA will settle the unpaid portion of your housing loan in a lump sum in the event of death or total permanent disability 

As paying for that home can be a major financial burden, especially if there is only one breadwinner in the family, you should ensure it remains with your family so that they at least have a roof over their heads in case something happens to you.

How can I protect my home?

To guarantee that your home remains with your family in case of some mishap, you should make sure that your property has Mortgage Reducing Term Assurance (MRTA) coverage. MRTA is also commonly known in the industry as Mortgage Reducing Term Insurance (MRTI), Mortgage Decreasing Term Assurance (MDTA) or Mortgage Life Insurance.

The term MRTA or MRTI may sound like a frightening insurance term with reams of fine print you have to agonise over to find out what it means. However, simply put, your MRTA is merely an insurance policy taken to cover the outstanding balance of your housing loan in case something occurs that renders you unable to continue paying the monthly instalment.

Essentially, the policy will settle the unpaid portion of your housing loan in a lump sum in the event of death or total permanent disability (TPD), an industry term which means that you no longer can earn a regular living due to, well, total permanent disability. This way, you can at least be assured that your loved ones will have a roof over their heads.

For instance, in one case, a successful businessman bought a large, beautiful home for his wife and four young children. Being a  prudent and responsible man, he took out an MRTA at the same time he signed the 20-year mortgage agreement.

Six months later, an accident occurred at his factory and the businessman was fatally injured. His wife, who had been a home-maker since they got married, was left to provide for their four children. Ordinarily, she would have had to make sure that not only were the children well provided for, she would also have had to make sure she met the monthly mortgage payments.

However, because the businessman has taken out an MRTA, the insurance company paid off the remainder of the 20-year mortgage on the house. All she had to do was provide for her children, secure in the knowledge that they would have a roof over their heads. 

Do I need an MRTA?

Unless you have bought your house outright in cash (how often does that happen these days?), you most definitely need an MRTA. If you are thinking of the extra cost an MRTA might add to your housing budget, the good news is that the MRTA can be built into your mortgage when you first take out the housing loan (or if you wish to pay Annually and/or by Credit Card for your MRTA call Koo Agency's Enquiry line 03-80246425 or e-mail them)

As you would not need coverage once your mortgage is paid for, the MRTA ends when you finish paying off your mortgage.

However, before you sign an MRTA form, you should ask to have a look at the panel of insurance companies (which is not compulsory) the bank usually has to provide MRTAs or you could inform the bank that you want to get your MRTA from the Insurer of your choice by approaching the company directly or through an Insurance Agency.  Also, before you sign the dotted line, always read the fine print. And if in doubt, make sure someone - preferably an agent from the insurance company you have chosen - explains the issue to you clearly.

Choose an insurer you have dealt with before and are comfortable with. Alternatively, choose a reputable insurer that you know provides good service. With insurance, it is usually the service that counts. The last thing you want is for your claim to be held up by red tape while the bank is knocking on your door for the next mortgage instalment when you are already having to deal with death or an accident.

^ Article extracted from NST Property Times - Signed&Safe