What is a Mortgage Insurance?
A Mortgage Reducing Term Assurance (MRTA) with reducing coverage, is usually taken as premium are lower compared other types of protection and health coverage. If you are taking or planning to take a Mortgage loan for your property, the bank or financial institute giving out the loan will usually require you to have a mortgage insurance. HDB flat owners are automatically included under CPF Home Protection Scheme. For private property owners, a mortgage insurance can be taken through the loaning bank or an insurance company.
What are the benefits of a Mortgage Reducing Term Assurance (MRTA)?
For the sum assured provided, the premiums are considered relatively much cheaper. The drawback is that the coverage expires after a set amount of time, as the policy is intended to cover the loan in the event that the insured pass away before the loan is paid off.
What are the alternatives to a Mortgage Reducing Term Assurance?
Instead of an MRTA, younger adults or property owner may instead consider a Level Term Insurance as the premium difference is not significant. Unlike an MRTA which solely provides a payout to cover the property in the event of demise, a term insurance can provide a lump sum payout to allow for property payment and/or financial coverage for the surviving family members.
As MRTA or Term Insurance are both policies with no cash value, some individuals may consider a limited payment Whole Life Insurance which not only cater to the mortgage loan but also consists of a cash value.
Read also: Term Insurance, Whole Life Policy
What else should I consider before taking up a Mortgage Reducing Term Assurance?
Regardless of the choices between MRTA, Term Insurance or Limited Payment Whole Life Insurance, consider riders that either pay out a lump sum or waive future premium in the event of major critical illness or cancer. A Base policy usually only payout upon demise, hence major critical illness or cancer means that payment for the property and/ or policy still have to proceed, despite taking a break or reduced work commitment during recovery.
What is the most competitive options for Mortgage Insurance based on my needs?
Use our InterestGuru Insurance quotation system to receive the most competitive quotes available.
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