When taking up a home loan in Malaysia, borrowers are often advised to consider insurance protection in case of unexpected events. Two common types are MRTA and MRTT. But what exactly are they, and which one suits you better?
💼 What is MRTA?
Mortgage Reducing Term Assurance (MRTA) is a lump-sum premium insurance policy that covers your outstanding housing loan in the event of death or total permanent disability (TPD). As the loan balance reduces over time, the insured amount also decreases accordingly.
🔑 Key Features:
💰 One-time premium payment (usually financed into your loan)
📆 Ideal for fixed loan tenure with no plans to refinance
🪙 Cheaper over the long term
🏦 Beneficiary: the bank
☪️ What is MRTT?
Mortgage Reducing Term Takaful (MRTT) is a Shariah-compliant alternative to MRTA. It operates under the Takaful concept, where participants contribute to a mutual risk-sharing fund.
🔑 Key Features:
📜 Follows Islamic finance principles
💸 Paid in lump-sum or installments
🛠️ More flexible coverage options
🏦 Beneficiary: the bank, like MRTA
⚖️ MRTA vs MRTT: Quick Comparison
| 🧾 Feature | 🔒 MRTA | ☪️ MRTT |
|---|---|---|
| Type | Conventional Insurance | Islamic Takaful |
| Payment | 💰 Lump-sum | 💳 Lump-sum or Installments |
| Flexibility | 📏 Fixed | 🔄 Flexible |
| Coverage | ⚰️ Death & TPD | ⚰️ Death & TPD |
| Refundable? | ❌ No | ✅ Sometimes |
| Best For | 🎯 Fixed loans | 🙏 Shariah-compliant buyers |
🤔 Do You Need MRTA or MRTT?
While not mandatory, many banks strongly encourage MRTA or MRTT to minimize loan risk. It’s especially useful if:
👨👩👧 You’re the main breadwinner
🛡️ You want to protect your family from mortgage burden
🕰️ You’re taking a long-term loan (e.g., 30 years)
📝 Some also consider MLTA or MLTT, which provide payout to beneficiaries instead of the bank.
✅ Final Thoughts
MRTA and MRTT both serve the same core purpose—to pay off your loan in the event of a tragedy—but they differ in structure and flexibility. Choose the one that aligns with your financial goals, values, and loan strategy.
📞 Need help deciding or want to compare quotes? Let’s chat!