MORTGAGE REDUCING TERM ASSURANCE (MRTA) What is it? And why would you need it? If you had applied for a loan from a bank to buy a property, you would probably had been asked or encouraged to purchase a Mortgage Reducing Term Assurance Policy or MRTA. MRTA is an insurance policy that settles outstanding home loan amounts in the event of death or total disablement of the borrower due to natural causes, illness or accidents. The premium is usually in the form of a single payment at the point of the loan application. It can be hefty, depending on the amount insured and duration of the policy. While some banks insist on you taking a MRTA policy as part of your loan arrangement, others merely encourage you to do so. MRTA is essentially a protection mechanism for borrowers, especially for households with sole bread winners. In the event of untimely death or disability of the borrower, the greatest problem facing surviving households is their ability to pay off the remaining home loan. For sole bread winners, buying maximum coverage is especially recommended despite a heftier premium, because your family is more at risk should anything happen to you. For households with multiple income earners, or if you already have a life insurance policy, you may consider opting for a policy with a lower coverage or none at all.
Posted on: Tue, 20 Aug 2013 06:43:08 +0000