Mortgage insurance products can be fairly straight forward. Mortgage life insurance pays off your mortgage if you pass on. You can pick decreasing or fixed term, based on the kind of loan you have. Disability mortgage insurance guarantees the payment of the monthly bill during a period of disability when you have no salary.
But behind these basic policies, there are some choices homeowners have to make in terms of their policies.
For example, a mortgage disability policy may be one with partial disability benefits and the beneficiary is paid a certain amount during the defined period of the disability or it may be with residual benefits where the beneficiary is paid benefits in proportion to his loss of income.
Short term as well as long term disability exists and you may decide to take short term if you feel you have other income that will start at a certain point. Those who choose this policy usually have a fall back plan that will cover their expenses if the disability lasts more.
In addition to choosing a policy, the buyer will have to choose between a choice of riders available. Some of the riders normally offered are guaranteed future insurability, non cancelable policy, waiver of premium, inflation protection or guaranteed renewable policy.
Inflation Protection
An inflation protection rider will periodically increase the benefit dollar based ona cost of living index. This will protect the mortgage benefit from being too little to pay your future mortgage.
Guaranteed Future Insurability
The value of your residence may increase due to market forces or improvements you have made, but if you purchase this rider, you will be guaranteed that you can increase the policy to cover it, without re-applying.
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 carries a rider that fixes its renewability, and, as long as the premiums are paid, the premiums cannot be raised.
Waiver of Premium
Another popular rider is a feature that allows for the premiums on the policy to be waived when benefits begin. This means that when you are disabled, you will not have to continue paying the premiums on your mortgage disability policy.