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MRTA, term life, life insurance
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Wed Jun 08, 2005 3:06 pm    Post subject: MRTA, term life, life insurance Reply with quote

Individual preference really, some people prefer term life, which I feel, seems more appropriate for people who will settle the loan in advance.

I prefer normal whole life participating policies as it is possible to 'rider' the policy. My attitude towards my investments is always somewhat kiasu. I've got a life insurance for every 'asset' that i have going (even for the car i own in Singapore). My policies are structured such that a portion is CI, another for TPD; with the smallest portion, payable upon death. Most of it is payable upon diagnosis of CI.

On top of the life insurances, I have a MRTA for every property (loan) I hold. I see MRTA as a bonus to the family. Life insurance is tide them through the short and medium term. MRTA = long term and sustained income and to minimise any burden. When i am no longer around, the MRTA will pay off some of the properties and if my wife wishes to stop working to take care of the kids, she can.
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Wed Jun 08, 2005 3:36 pm    Post subject: Reply with quote

oh yeah, i also pay for my MRTA upfront (for the 30 years) and if i redeem my loan early, AIA is supposed to reimburse me the unused portion.
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mercuri



Joined: 03 May 2005
Posts: 4599
Location: KL

PostPosted: Wed Jun 08, 2005 3:37 pm    Post subject: Reply with quote

I reckon if I have so many commitments such as u have, I would have done the same, as I am commitment free apart from my newly purchased condo, I don't have such a detailed and structured insurance, although I want to have that in time.

So if I were to plan to pay off my home loan earlier, it would be better to take a term life insurance?

Quote:
I've got a life insurance for every 'asset' that i have going (even for the car i own in Singapore). My policies are structured such that a portion is CI, another for TPD; with the smallest portion, payable upon death. Most of it is payable upon diagnosis of CI.


meaning u must be paying a lot of premiums a year! Holy cow! Wink
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nick1994



Joined: 24 Apr 2005
Posts: 6116

PostPosted: Wed Jun 08, 2005 3:46 pm    Post subject: Reply with quote

..banzai...

MRTA refunds as in all insurance refunds, u prob r aware is not so favourable........

as compared 2 if u buy term with the riders....



without even bringing into the picture that buying term u can buy exactly what u need 2 cover whats outstanding 4 your loan...
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wacheelei



Joined: 01 Jun 2005
Posts: 34

PostPosted: Wed Jun 08, 2005 7:17 pm    Post subject: Reply with quote

I never opt for MRTA for the loan (except for the first loan that I took which i was dubbed into by the sales ppl Mad ), and insist it on the bank for best rate without MRTA. I normally prepay a few year after the loan started.

Nick1994, I think your option of getting only term is very good indeed. That way u dont lose any bonus if you choose to terminate the insurance, as opposed to life, and can take only amount u need to insure.

I'm more interested in term instead of life. Is there any term assurance that covers for critical illnesses as well?
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Wed Jun 08, 2005 9:29 pm    Post subject: Reply with quote

nick1994 wrote:
..banzai...

MRTA refunds as in all insurance refunds, u prob r aware is not so favourable........

as compared 2 if u buy term with the riders....

without even bringing into the picture that buying term u can buy exactly what u need 2 cover whats outstanding 4 your loan...


Actually i'm not aware of MRTA refunds and my thought is that MRTA will have a surrender value based on the unused portion (pro-rated) of 30 year coverage (please enlighten me). This was shown to me by my agent through a schedule/email. AFAIK, term life don't come with riders (most importantly, critical illness).

I pay about RM15k per year for whole life participating insurance or endowment policies. If i don't die, i will have shitloads of surrender value. If i die, my family will be rich.
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nick1994



Joined: 24 Apr 2005
Posts: 6116

PostPosted: Wed Jun 08, 2005 10:54 pm    Post subject: Reply with quote

edited

Last edited by nick1994 on Wed Jun 28, 2006 4:01 pm; edited 1 time in total
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Wed Jun 08, 2005 11:17 pm    Post subject: Reply with quote

Yeah.. i have not surrendered any policies yet. I got the surrender schedule for the MRTA out of curiosity but it didn't look that bad compared to the normal life insurance policies. But yeah.. not exactly pro-rated but also nowhere as disadvantageous as surrendering life policies.

Nick1994: almost 100% sure term life don't come with riders. Check with your insurer, i've checked with AIA and i'm quite sure ING doesn't offer it.

Guys (wacheelei + nick), please enlighten me why term life is better ? I've done my research and can't come up with a good reason why i should go with term life. Past 10 years, term life's cost is about the same as MRTA for 30 years.
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nick1994



Joined: 24 Apr 2005
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PostPosted: Thu Jun 09, 2005 12:37 pm    Post subject: Reply with quote

edited

Last edited by nick1994 on Wed Jun 28, 2006 4:00 pm; edited 1 time in total
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Thu Jun 09, 2005 1:34 pm    Post subject: Reply with quote

Hi nick,

I understand what you are getting at and yes, it does make sense although i have yet to compare the figures. What i was thinking of implementing was a term life for 1 year (prepay all i want in the first year) and thereafter, just pick up a MRTA for the remaining 29 years and let the loan ride itself out. This way, i do not over-insure.

Let me know if term life can factor in riders (the only rider i care about is CI). My understanding is not possible. MRTA is possible to factor in CI but a limited number of CIs compared to the 30+, MRTA CI is about 10. It is also expensive (twice the amount of non-CI MRTA) for the same sum insured quantum.
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wacheelei



Joined: 01 Jun 2005
Posts: 34

PostPosted: Thu Jun 09, 2005 5:47 pm    Post subject: Reply with quote

Hi Banzai,

My idea of insurance is mainly for protection. And I dont wanna insure for whole life coz premium to maintain at old age is too high to be worthwhile, so very likely at some age maybe 60-70 (when u dont really need much protection anymore) you'll be terminating your whole life policy if still alive. If choose to take back the surrender value, the surrender value normally is not very attractive as we all know some premium will go to insurance company and due to inflation its not going to much. So therefore I normally dont bother with investment portion of insurance as my main concern is only protection. The insurance company shows ppl the investment portion to hook ppl into buying insurance.

As for MRTA, the coverage is reducing so not very worthwhile as I do not plan to run the full tenure of the loan. So left with Term life only. My initial plan for term life to cover for 25-30years (I'm 32 now), and have been looking for coverage that includes critical illness, didnt manage to find one though. As you have put it, yeah i dont think there's a product like this available. However I have gone thru John Hancock/Manulife website and found something like that but I havent confirmed with them.

As for your case, if you plan to run the full course of your loan, then I think MRTA is still worthwhile, as you put it that you manage to include CI rider to it as well. However my only concern for holding a property for say 30 years is that environment or human habits changes and that I have to sell my property before the 30 years is up.

Nick brought up a very good point of getting term life coverage renewing it year by year, coz this way you're pretty certain how much coverage you need and dont pay a single sen extra to the insurance company. However there is disadvantage in this is that if I happened to shows some symptoms and the insurance dont wanna to insure me or wants very high premium or something like that. So also got pros and cons.

Appreciate that you started the topic, coz I have been thinking for quite sometime on this as well. Cheers.
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wacheelei



Joined: 01 Jun 2005
Posts: 34

PostPosted: Thu Jun 09, 2005 5:55 pm    Post subject: Reply with quote

nick1994 wrote:


if u have taken a MRTA and sell u'r place, its better 2 transfer that MRTA 2 another loan if u have any then redeem the policy......



nick, how do you go about that? I have an MRTA which loan that I've paid up but never thot that can transfer it to another loan. Please enlighten.
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Fri Jun 10, 2005 7:50 am    Post subject: Reply with quote

term life also has the added benefit of putting the money in your pocket if the unexpected happen vs MRTA which you don't see a single cent, ever. Hence for term life, my view is that you can't really 'over-insure' Razz
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wacheelei



Joined: 01 Jun 2005
Posts: 34

PostPosted: Fri Jun 10, 2005 5:51 pm    Post subject: Reply with quote

My idea of over-insure would be leaving too much behind for the next generation which would then turned them into spoil-brats Smile .

If MRTA is transferable, I would consider getting some in the future property purchase.

Banzai: How did you manage to get the CI into the MRTA, did u deal with the agent or go direct to the insurance company?
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Fri Jun 10, 2005 6:16 pm    Post subject: Reply with quote

I am not aware of MRTA being transferable but maybe it is specific to an insurer.

I asked my agent to incorporate the CI into the MRTA but the CI coverage is a much less.. i think like 7 CIs. I can dig up more info if you want to know more. I've only dealt through agents. Useful later also if your beneficiaries need to lodge a claim and have someone helping you.
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wacheelei



Joined: 01 Jun 2005
Posts: 34

PostPosted: Fri Jun 10, 2005 6:52 pm    Post subject: Reply with quote

I was wondering that if can incorporate CI into MRTA, then it should be able to put it into a term life as well. Just wanted to find out how you go about it so that can follow the same procedure for incorporating CI into term life.

Thanks for the info, I would consult more agents about CI with term life coz most agents dunno much about how insurance works, they just know how to sell what they have been taught, i.e. investment-link insurance, and get hefty commission out of it.
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nick1994



Joined: 24 Apr 2005
Posts: 6116

PostPosted: Fri Jun 10, 2005 11:37 pm    Post subject: Reply with quote

edited

Last edited by nick1994 on Wed Jun 28, 2006 3:58 pm; edited 2 times in total
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Fri Jun 10, 2005 11:57 pm    Post subject: Reply with quote

nick,

MRTA not transferrable for AIA.
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my44



Joined: 03 May 2005
Posts: 430

PostPosted: Sat Jun 11, 2005 2:46 am    Post subject: Reply with quote

Hmm, transferable MRTA?

My situation is like this: I bought a studio, with bank loan UOB, MRTA from Uni.Asia. But the studio construction didn't pan out, I need to cancel the bank loan. UOB said I need to pay-off Uni.Asia first, to make the loan balance = RM0, before I can cancel the MRTA as well.

Maybe if I buy another property, just transfer that uni.Asia MRTA to to the new one lah?
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Sat Jun 11, 2005 9:34 am    Post subject: Reply with quote

my44,

we're talking about between properties lah.. meaning finish paying off property already, MRTA is still in effect, just use the MRTA for another property.
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nick1994



Joined: 24 Apr 2005
Posts: 6116

PostPosted: Sat Jun 11, 2005 4:30 pm    Post subject: Reply with quote

edited

Last edited by nick1994 on Wed Jun 28, 2006 3:57 pm; edited 1 time in total
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Sat Jun 11, 2005 6:37 pm    Post subject: Reply with quote

Hi,

Well i was just quoting my agent. But nick is correct, i looked at the AIA MRTA certificate of insurance and none of them referrd to the property address etc.

Wonder how this is done. Maybe i'll call up another agent at ING and ask him.
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mercuri



Joined: 03 May 2005
Posts: 4599
Location: KL

PostPosted: Thu Jul 07, 2005 10:01 am    Post subject: Reply with quote

BTW Any idea how MRTA is calculated? AFAIK it depends on the amount of loan from the property, the age when u buy, and also the tenure of the loan.

According to my insurance agent, MRTA with 36CIs are not worthwhile. As when u pay off the housing loan early, there will be a refund of whatever portion of the MRTA and the 36CIs automatically would not be valid. Furthermore even when u develop the one of the 36 illness, the portion of money reimbursed will depends on the sum insured and if it's less does not cover the housing loan.
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Thu Jul 07, 2005 7:12 pm    Post subject: Reply with quote

Dude, you suck at explaining Wink

Not sure what you're trying to explain.

MRTA by virtue of it being an insurance, should cover only the sum assured. It should never be less than housing loan, unless somehow you re-financed the loan upwards and kept the MRTA at the same amortising schedule.
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mercuri



Joined: 03 May 2005
Posts: 4599
Location: KL

PostPosted: Thu Jul 07, 2005 8:00 pm    Post subject: Reply with quote

Banzai wrote:
Dude, you suck at explaining Wink

Not sure what you're trying to explain.

MRTA by virtue of it being an insurance, should cover only the sum assured. It should never be less than housing loan, unless somehow you re-financed the loan upwards and kept the MRTA at the same amortising schedule.


Yaya, trying to do things to fast eh? What I am trying to say albeit so incoherently is that for MRTA with the 36CIs, when the loan is fully paid before the loan tenure expires (ie completing a 20 year loan in 5 years )the remaining money for what is left from ur premium will be refunded. After the refund, the coverage for the 36CIs will be over. What i want to say is why not buy seperately? Rolling Eyes
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