mortagesandforeclosures

by Brandon P. Nadeau

There exist only two mortgage insurance products. One product is mortgage life insurance, which guarantees that your home loan will be paid if you pass on. This may be either decreasing term or fixed term, it depends on the kind of mortgage you have. The other type of mortgage insurance is disability that will keep paying your monthly mortgage when you become disabled.

But behind the basic policies, there are some choices buyers have to make regarding their policies.

First make sure you understand if you have picked a partial disability policy, with a predefined amount or a residual policy, that has an amount based on current salary.

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. 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 begin that income stream.

In addition to picking 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

With this rider, inflation is factored into the benefit, so that your disability payments, for example, will go up as the cost of living goes up. A rider like as this prevents your disability payment from becoming inadequate should inflation pick up.

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

You will always possess the right to renew the insurance, however the insurer reserves the right to increase premiums.

Non-Cancelable Policy

This rider will renew the policy and also protects the premium from increase.

Waiver of Premium

Once you start collecting a benefit, the premiums are no longer due if you have this rider. This means that when you are disabled, you will not have to continue paying the premiums on your mortgage disability policy.

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