Housing Loan Insurance

It is extremely important to take insurance coverage when you purchase a house. The most important factor is that it gives you and your loved ones peace of mind, in the form of financial security if an unfortunate event should occur.

There are two important insurances to consider:

The House Owner/Fire Insurance policy

This policy provides coverage for your property against natural disasters such as flood, fire, riot, strike and malicious damage. For properties with strata titles such as apartments or condominiums, you need not buy the insurance because the Management Corporation (MC) would have taken up insurance on the entire building. You should ensure that you obtain the sub-certificate of the Master Policy issued by the insurance company from the MC and present it to the financial institution. This is necessary so that the financial institution is aware that the property has been insured and will not buy another fire insurance on your property. In such a case, you will be required to assign your rights under the policy to the financial institution.

 

Mortgage Term Assurance

Mortgage Reducing Term Assurance 

MRTA

Mortgage Level Term Assurance 

MLTA

- Cover will reduce throughout loan tenure (cover Outstanding loan) - Cover remain fixed throughout loan tenure (cover Principal loan)
- No cash returned - Have cash return
- Cannot transfer when refinance/new purchase - Can transfer when refinance/new purchase
- Cover stop after loan tenure end (cover expired at 65) -Cover continue after loan tenure end (cover till 100yo)
- Can finance into loan but need to pay interest -Cannot finance into loan therefore no need to pay extra interest
- No Guaranteed to settle outstanding balance (because Outstanding balance affected by BLR fluctuation but MRTA amount no) - Guaranteed can settle outstanding balance (MLTA amount always > Outstanding balance)
- High initial premium (Higher premium according to aging) - Lower initial premium (Premium fixed even aging)
- No installment (One time payment) - Can pay by monthly installment
- No benefit paid upon diagnosed of 36 critical illness - MLTA amount will paid to settle loan upon diagnosed of 36 critical illness
- An expense/a liability -An investment/an asset
- No tax relief - Tax relief RM7,000