There are not a lot of varieties when it comes to mortgage insurance products. Mortgage life insurance pays off your mortgage if you pass on. This can be either decreasing term or fixed term, it depends on the nature of your mortgage. Disability mortgage insurance means the payment of the mortgage bill during a period of disability when you have no salary.
But behind these basic policies, there are some choices buyers have to make in terms of their policies.
In discussing a mortgage liability insurance policy, be sure you know whether your broker is discussing a partial disability policy where you get a predefined amount during the disability term, or a residual policy where you get a percentage of your income.
Small term in addition to long term disability exists and you may choose upon small term if you feel you have other income that may start at a certain point. Those who choose this policy usually have a fall back plot that will cover them if the disability lasts more.
There are also a number of riders that will be offered to a policy purchaser. Some of the riders usually offered are guaranteed future insurability, non cancelable policy, waiver of premium, inflation protection and guaranteed renewable policy.
Inflation Protection
An inflation protection rider will periodically increase the benefit dollar based onsome cost of living index. This will protect your mortgage benefit from being inadequate for paying your future home loan payments.
Guaranteed Future Insurability
If the value of the property grows, whether through normal appreciation or because of improvements, the value of the policy can grow with it, without any requirement for a new application.
Guaranteed Renewable Policy
This rider guarantees that the policy will always be able to be renewed (as long as premiums are current, though they may go up.)
Non-Cancelable Policy
A policy that is non cancelable has a rider that fixes its renewability, and, as long as the premiums are paid, the premiums cannot be raised.
Waiver of Premium
Once you start collecting a benefit, the premiums are no longer due if you have this rider. This is to prevent any additional expenses during the length of your disability.