MRTA Calculator

Buying a house is a major thing. One thing that some people did not consider is MRTA. When I bought my last property, the bank officer proposed to me an MRTA for my loan in which the premium is equivalent to the total of my monthly bank loan instalment. I almost fall off my chair when I saw that! He proposed an MRTA which is has a return, protection and critical illness coverage. Basically, the insurance covers almost all situations, i.e. if I die, if I were to fall into one of the 36 critical illness, the insurance company will settle the loan. If I survive the entire period, I get to get back all the premium I have paid to the insurance company.

Do we really need to pay that kind of money to have such a comprehensive cover? That is a question insurance agents including the bank officers (I learned later that he too is an insurance agent and he gets commissions for the MRTA that I bought) will be only too glad to tell you that you need all of it. I mean what else does the bank want? They already got security from the property being charged, they only loan you 90% of less, they marked up their interest rate to cover the financial risk, not they want to cover in case you die. This is almost risk free lending.

In actual fact, you don't need to have such comprehensive cover. Most banks lend on the criteria that the loan instalment is 1/3 of your income. If MRTA takes up another 1/3, you will have only 1/3 to survive.

How much should you pay for your MRTA? Here is a website that could calculate the MRTA you need to pay.

http://www.fiscal-wise.com.my/FinancialTools/MRTACalculator.aspx