When taking a home loan in Malaysia, banks often require โ or strongly recommend โ mortgage insurance. MRTA (Mortgage Reducing Term Assurance) and MLTA (Mortgage Level Term Assurance) are the two main options. They differ significantly in cost, coverage and flexibility.
What Is MRTA?
MRTA is a reducing term insurance where the coverage amount decreases in line with your outstanding loan balance. If you die or become totally and permanently disabled (TPD), the insurance pays off exactly what you owe. It is typically a single premium added to your loan or paid upfront.
Example: RM400,000 loan for 30 years โ MRTA premium approximately RM15,000โRM25,000, depending on age and bank.
What Is MLTA?
MLTA is a level term insurance with a fixed sum assured throughout the loan tenure. It pays out the full cover amount regardless of the loan balance โ meaning your family gets the remaining proceeds after the loan is settled. MLTA also has cash value and sometimes includes critical illness coverage.
MRTA vs MLTA Comparison
| Feature | MRTA | MLTA |
|---|---|---|
| Coverage | Reducing (follows loan) | Level (fixed amount) |
| Premium | Single (added to loan) | Monthly (separately) |
| Cost | Lower overall | Higher overall |
| Cash value | None | Yes (surrender value) |
| Benefit to family | Loan cleared only | Loan cleared + cash payout |
| Portability | Tied to original loan | Portable โ follows you |
| Critical illness | Not usually | Optional add-on |
If you need a comprehensive life insurance review, use our ๐ก Life Insurance Calculator.
Which Should You Choose?
Choose MRTA if: you want the cheapest option, already have adequate life insurance separately, or the bank requires it as a condition of the loan.
Choose MLTA if: you want family protection beyond just the loan, value cash value accumulation, or are relatively young with a long policy horizon.
Our editorial team specialises in Malaysian personal finance โ covering loans, taxation, insurance, EPF, and Islamic finance. Every article is fact-checked against Bank Negara Malaysia (BNM), LHDN, and major Malaysian bank publications. We reference our calculators (which use industry-standard formulas) to ensure consistency between our written content and tools. Learn more about our methodology โ