Buying a home is an exciting milestone, but it also comes with a significant long-term financial commitment. For many of us, a home loan spans decades, making it crucial to protect our investment and our loved ones from unforeseen circumstances. This is where mortgage insurance, MRTA, MLTA, MRTT, and MLTT comes into play.
While the names might sound like K-pop groups battling for the top charts, these policies are serious financial tools designed to secure your home loan in the event of death or total permanent disability (TPD). Let’s explore what each of these options offers, how they differ, and which one could be the right fit for you.
Understanding the Basics of Mortgage Insurance

Mortgage insurance is a type of life insurance tied to your home loan. Its primary goal is to pay off the remaining balance of your loan if you pass away or are unable to work due to TPD. This ensures that your family or loved ones can keep the house without the burden of repaying the loan.
In Malaysia, there are four key types of mortgage insurance:
- MRTA (Mortgage Reducing Term Assurance)
- MLTA (Mortgage Level Term Assurance)
- MRTT (Mortgage Reducing Term Takaful)
- MLTT (Mortgage Level Term Takaful)
The main difference between them lies in how the coverage works and whether they adhere to Islamic finance principles (takaful).
What is MRTA?
Mortgage Reducing Term Assurance (MRTA) is a straightforward, cost-effective type of mortgage insurance. The coverage decreases over time, matching the outstanding balance of your home loan.
Key Features of MRTA:
- Coverage: The sum insured reduces as your loan balance decreases.
- Beneficiary: The bank is the sole beneficiary; your family does not receive any payout beyond the loan repayment.
- Premium: Paid as a one-time lump sum, often financed into the home loan.
- Cost: Lower compared to other options since the coverage reduces over time.
Example:
Imagine you take a RM500,000 loan for 30 years. If you pass away after 10 years with RM350,000 left on the loan, MRTA will pay that amount to the bank. Your family keeps the house but doesn’t receive any additional financial benefit.
Who Should Choose MRTA?
- Those who already have standalone life insurance.
- Homeowners looking for affordable, minimal coverage.
- Individuals with fewer dependents or other financial obligations.
What is MLTA?
Mortgage Level Term Assurance (MLTA) provides fixed coverage throughout the policy term. It offers more than just loan repayment—any surplus payout after clearing the loan goes to your chosen beneficiaries.
Key Features of MLTA:
- Coverage: The sum insured remains constant throughout the policy duration.
- Beneficiary: The bank gets the loan repayment, and any excess is paid to your family.
- Premium: Paid in periodic installments (monthly, quarterly, or annually).
- Cost: Higher than MRTA due to the additional benefits and fixed coverage.
Example:
Let’s say your MLTA coverage is RM500,000, and your outstanding loan balance is RM300,000. Upon a successful claim, RM300,000 goes to the bank, and the remaining RM200,000 is given to your family as a cash payout.
Who Should Choose MLTA?
- Homeowners with dependents who need extra financial security.
- Those looking for a policy with savings or investment benefits.
- Individuals who want flexibility in transferring their policy if they refinance or buy a new home.
What are MRTT and MLTT?

MRTT and MLTT are Islamic versions of MRTA and MLTA, respectively, operating under Shariah principles. They are ideal for individuals who want mortgage insurance that complies with Islamic finance laws, avoiding interest-based transactions (riba).
MRTT (Mortgage Reducing Term Takaful):
- Similar to MRTA, but follows Islamic finance principles.
- Coverage decreases over time in line with the loan balance.
- Premium is a one-time lump sum payment.
MLTT (Mortgage Level Term Takaful):
- Similar to MLTA, but adheres to takaful principles.
- Coverage remains fixed throughout the term.
- Premiums are paid in regular installments.
Comparing the Four Options
Feature | MRTA | MLTA | MRTT | MLTT |
Coverage | Reduces over time | Fixed amount | Reduces over time | Fixed amount |
Beneficiary | Bank only | Bank + Family | Bank only | Bank + Family |
Premium Payment | Lump sum | Installments | Lump sum | Installments |
Cost | Lower | Higher | Lower | Higher |
Shariah-Compliant | No | No | Yes | Yes |
FAQs About Mortgage Insurance
1. Is Mortgage Insurance Compulsory?
No, mortgage insurance is not legally required in Malaysia. However, many banks make it a condition for home loan approval, especially for MRTA or MRTT.
2. How Much Does It Cost?
The cost depends on factors like your age, loan amount, and policy term.
- MRTA/MRTT: Cheaper due to reducing coverage; premiums are typically paid as a lump sum.
- MLTA/MLTT: More expensive because of fixed coverage and additional benefits.
3. Can I Get a Refund?
- MRTA/MRTT: No refunds. The payout covers only the loan balance.
- MLTA/MLTT: Refundable. Any amount exceeding the loan balance goes to your beneficiaries.
Which One is Right for You?
- Choose MRTA/MRTT if:
- You want a budget-friendly option.
- Your primary goal is loan repayment.
- You have standalone life insurance to cover other needs.
- Choose MLTA/MLTT if:
- You have dependents and need extra financial protection.
- You want a policy that includes savings or investment returns.
- You prefer coverage that remains constant throughout the loan term.
Final Thoughts: Protecting Your Home and Loved Ones

Choosing the right mortgage insurance is more than a financial decision, it’s about peace of mind. Whether you go for MRTA, MLTA, MRTT, or MLTT, the key is to evaluate your personal needs, financial situation, and long-term goals.
If you’re unsure, consult a financial advisor to ensure your choice aligns with your family’s future security. Remember, a small investment in mortgage insurance today could save your loved ones from financial hardship tomorrow.
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