What happens to my outstanding mortgage (without insurance coverage) in the event of my death?
The deceased's survivor or next of kin can claim through the court the rights of the deceased's property. The person will have an option to either proceed to service the loan or redeem it.
However, most financial institutions make it compulsory to insure (MRTA 1) against such an event.
- Mortgage Reducing Term Assurance (MRTA) - A term insurance which reduces over the tenure of the loan. This form of insurance is used to provide cover for the outstanding loan amount, in the event of death or total permanent disability of the insured. MRTA is normally calculated to meet the outstanding loan amount.
Reprinted with permission from BankingInfo (A Consumer Education Programme by Bank Negara Malaysia)
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