There are not a lot of varieties when it comes to mortgage insurance products. There is mortgage life insurance to guarantee that your home loan will be paid on the event of your death. You can pick decreasing or fixed term, depending on the kind of loan you have. There is mortgage disability insurance, which will guarantee that your home loan payment will be made in case you are disabled and cannot work.
But behind these basic policies, there are some choices buyers have to make in terms of their policies.
For example, a mortgage disability policy can be one with partial disability benefits whereby 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.
You may have a choice between short term disability insurance where the policy will cover a maximum term of, for example two years. This is usually a policy for someone who has another policy that would kick in at a later age.
There are also a number of riders that will be shown to a policy purchaser. Some of the riders normally offered are guaranteed future insurability, non cancelable policy, waiver of premium, inflation protection and guaranteed renewable policy.
Inflation Protection
With this rider, inflation is factored into the payout, so that your disability payments, for example, will go up as the cost of living goes up. A rider such as this prevents your disability payment from becoming inadequate should inflation heat up.
Guaranteed Future Insurability
The value of your home may increase because market forces or improvements you have made, but if you purchase this rider, you will be guaranteed that you can increase the insurance to cover it, without re-applying.
Guaranteed Renewable Policy
You will always possess the right to renew the policy, but the insurer reserves the right to increase premiums.
Non-Cancelable Policy
This rider renews the policy and also protects 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 pick this rider. This prevents any additional expenses during the length of your disability.
Tags: home, insurance, life insurance, mortgage, mortgage life insurance, property insurance, real estate