In Malaysia, it’s common for people to invest in properties with the expectation that they will generate income or provide security for their children. However, while owning multiple properties can seem like a wise investment, it comes with significant challenges, especially when not managed properly. Without the right strategies in place, you may end up passing debts to your family instead of wealth.
When you pass away, any property with an outstanding loan needs to have the debt settled before it can be distributed to your beneficiaries. If the loan isn’t covered, your family might be forced to sell the property, often at a loss, to clear the debt. This means instead of inheriting wealth, your family may inherit problems. But there is a way to avoid this.
MRTT vs MLTT: Choosing the Right Takaful Coverage
If you are investing in properties, you may already be familiar with MRTT (Mortgage Reducing Term Takaful), which provides decreasing coverage as the loan is repaid. While this may seem sufficient, a better alternative is MLTT (Mortgage Level Term Takaful). MLTT maintains the same level of coverage throughout the loan term, providing additional security. In the event of critical illness or death, your family not only receives coverage for the outstanding loan but may also have extra funds to manage their financial situation.
But owning multiple properties means having to pay for multiple Takaful premiums. For instance, if you own ten houses, you’ll need to pay ten different premiums, which can become a significant financial burden. And let’s say your children don’t want to live in these houses and decide to sell them instead — the whole purpose of your investment could be lost.
Simplifying Wealth Management with Life Takaful Hibah
A smarter, more flexible option is to focus on Life Takaful (with Conditional Hibah). This type of Takaful allows you to name specific beneficiaries who will receive the payout upon your death, and the amount they receive is non-contestable. Unlike property, which requires estate management and can lead to family disputes over distribution, Life Takaful with Hibah ensures that the wealth is directly transferred to your chosen beneficiaries, and they won’t face any delays or complications.
By utilizing Life Takaful for inheritance planning, you reduce the costs associated with estate management and avoid potential legal battles between family members. The payout from Life Takaful can be used for any purpose — from paying off loans to securing your family’s financial future — without the need to liquidate physical assets like property.
Plan Smarter, Not Harder
Instead of over-investing in properties, consider balancing your investments with Life Takaful Hibah. This strategy simplifies your wealth distribution process, ensures your family is well taken care of, and avoids the potential pitfalls of property inheritance. For those who need guidance on how to structure their wealth management plan, Pn Khairulsharia is available to help you design a Takaful plan that suits your needs. You can reach her at 016-2266400 to start planning for a secure future today.