In Singapore, mortgage insurance is usually called Mortgage Reduced Term Assurance (MRTA). This insurance plan covers your home loan, so that if you lose your income, your family will have enough to pay off your home loan. The MRTA provides a lump sum pay out (assured sum), which gradually decreases as the home loan is amortized (paid off).
With few exceptions (e.g. the family’s sole breadwinner is immortal), it’s highly advisable to have MRTA. In the event of disaster, at least your surviving family won’t be showering
MRTA pertains mainly to owners of condos or landed property, since HDB owners use the compulsory Home Protection Scheme (HPS). However, HDB owners may approach private insurers as an option.
The reasons to get MRTA are:
- Property is illiquid
- Premiums end before loan tenure
- Comparatively low premiums
- We are highly in debt. So that we are not the burden to the family.