Mortgage insurance products can be fairly straight forward. There is mortgage life insurance to guarantee that your home loan will be paid in case of your death. This kind of insurance can be decreasing term or fixed; your kind of mortgage will determine that. Disability mortgage insurance guarantees the payment of the monthly bill during a period of disability when you have no salary.
But in addition to the plain vanilla variety of mortgage insurance products, homeowners have some choices about the complete nature of their policy.
In discussing a mortgage liability insurance policy, be sure you understand whether your broker is discussing a partial disability policy where you get a predefined amount during the disability period, or a residual policy where you get a percentage of your income.
A home owner could also pick a short term disability benefit whereby the policy would only pay benefits for a shorter, fixed length of time, such as two years. Those who use this policy usually have a fall back plan that will cover their expenses if the disability lasts longer.
There are also a number of riders that will be shown to a policy purchaser. These include inflation protection, guaranteed future insurability, guaranteed renewable policy, non cancelable policy or waiver of premium.
Inflation Protection
An inflation protection rider will automatically increase the benefit amount based ona cost of living index. This will protect your mortgage benefit from being inadequate for paying your future mortgage.
Guaranteed Future Insurability
If the value of the home 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
You will always possess the right to renew the policy, however the insurer reserves the right to increase premiums.
Non-Cancelable Policy
This rider renews the policy and also will protect the premium from going up.
Waiver of Premium
When have started collecting benefits under the policy, you will not have to continue to pay the premiums, if you choose this rider. It would be a difficult financial burden to have to continue to pay the premiums on the policy after you have become disabled.
|
|