Mortgage Insurance Quote Canada: What are Mortgage Disability Insurance Riders?

Posted by Brandon P. Nadeau

July 4, 2009

by Brandon P. Nadeau

There are not a lot of variations when it comes to mortgage insurance products. There is mortgage life insurance to make sure that your mortgage will be paid in case of your death. This can be either decreasing term or fixed term, depending on the nature of your mortgage. The other kind of mortgage insurance is disability that will keep paying your monthly mortgage in case you become disabled.

But behind the 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 and the beneficiary is paid a certain amount during the defined period of the disability or it can be with residual benefits where the beneficiary is paid benefits in proportion to his loss of 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 mortgage when you begin that income stream.

Besides the kinds of insurance a homeowner can pick, there are number of optional features, or riders, that can be written onto a policy. Some of the riders normally offered are guaranteed future insurability, non cancelable policy, waiver of premium, inflation protection or guaranteed renewable policy.

Inflation Protection

Buying this rider will mean that your benefit will increase as inflation goes up. This protects against the disability payments being way short of the required payments in the future.

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 have the right to renew the policy, but the insurer reserves the right to increase premiums.

Non-Cancelable Policy

With the purchase of such a rider, the policy is renewable, and it is protected from increased premiums.

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 when you are disabled, you will not have to continue paying the premiums on your mortgage disability policy.

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