Toronto Term Life Insurance: What are Mortgage Disability Insurance Riders?
Posted by Brandon P. Nadeau on July 5th, 2009
There exist merely two mortgage insurance products. Mortgage life insurance pays off your home loan if you pass on. You can choose decreasing or fixed term, based on the kind of mortgage you have. The other kind of mortgage insurance is disability that will continue to pay your monthly mortgage when you become disabled.
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 understand whether your broker is talking about 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. If you have retirement funds and planned on early retirement, you may not need to have disability insurance to cover your home loan when you start that income stream.
There are also a number of riders that will be shown to a policy purchaser. They are: guaranteed renewable policy, non cancelable policy, guaranteed future insurability, inflation protection or waiver of premium.
Inflation Protection
An inflation protection rider will periodically increase the benefit amount based ona cost of living index. This will protect the mortgage benefit from being too little to pay your future mortgage.
Guaranteed Future Insurability
A rider such as this will let the policy holder increase the amount of the policy if the value of the house grows, without having to reapply for the mortgage insurance.
Guaranteed Renewable Policy
You will always possess the right to renew the insurance, but the insurer reserves the right to increase premiums.
Non-Cancelable Policy
This rider will renew the policy and also will protect the premium from going up.
Waiver of Premium
Another popular rider is one that that allows for the premiums on the insurance to be waived upon receiving benefits. This means that while you are disabled, you do not have to continue paying the premiums on your mortgage disability policy.