Home fire insurance and mortgage-reducing term assurance (MRTA) cover different risks. Property insurance pays for covered damage to property under the policy terms. MRTA is life insurance that may pay a specified benefit toward a mortgage if a covered event occurs. One policy does not replace the other.
What to Check When a Bank Offers Insurance
- Ask which coverage is required for the loan and which is optional.
- Request the interest rate and total costs both with and without the insurance.
- Read the beneficiary, coverage term, insured amount, and exclusions.
- Check whether the policy uses rebuilding cost or another valuation, and which losses are excluded.
- Compare the premium with the risk you want to cover and any existing insurance benefits.
The OIC provides information about fire insurance and a tool to calculate a fire-insurance sum insured. Use them as a starting point; the appropriate amount depends on the building and policy terms. Ask the bank to separate loan conditions from the insurance sales documents.
The attached video does not discuss home insurance or MRTA and is not evidence about coverage. Read next about comparing health insurance and home-loan costs.
Sources: OIC information on fire insurance and OIC insurance-policy search.