In previous article, we’ve talked about the important of a mortgage life insurance when you taking up a home loan to buy a house.
In today, we will discuss about how much premium you need to pay for your mortgage life insurance. Generally, it is subject to your loan amount, loan tenure and your age. The older you are and the higher the loan amount, the higher the premium you will need to pay.
A mortgage life insurance is similar with others life insurance, which the applicant need to make regular payments, known as premiums to the insurer. If you make a claim, your insurer will pay-out for the loss that is covered under the insurance policy. If a person is diagnosed with certain disease, the insurance company has the right to reject the application or will be extra loading in the premium. It is depends on how serious the disease is and will only be determined after a medical check by their panel hospitals.
Let’s us take MRTA and MLTA (2 common mortgage life insurance in Malaysia) as example;
| MRTA | MLTA | |
| Age | 28 | 28 |
| Property Value | RM 500K | RM 500K |
| Financing/ coverage | RM 450K (90%) | RM 450K (90%) |
| Interest rate | 6% | 6% |
| Premium | RM 11,695.50 (One-time) | RM 4,081.50 (Annually)RM 357.13 (Monthly) |
| Total cost (30 years) | RM 11,695.50 | RM 122,445 |
| No claim cash back (30 years) | RM 0 | RM 184,383 |
| Payment if TPD in 2020 | RM 411,300 | RM 450,000 |
| Payment if loss of life in 2020 | RM 411,300 | RM 450,000 |
* The above figures are for reference purpose only as the interest rate will differ from insurer to insurer.
So, before you taking any mortgage life insurance, do make sure you’re understanding its terms and conditions and which insurance company or financial planner is best to you. Fully understand what you are buying is crucial in managing your hard earn money. If you are unable to pay the premium of MRTA (as you need to pay RM 11,695.50 one time), you can opt to add the premium into the home loan and your financial burden will go up a little as the loan repayment will increase.
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