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How to Obtain the Best Mortgage Insurance Policy

Rider Overview

Many insurance companies have additional benefits you can buy with your Mortgage Insurance Policy. Much like an a la carte menu, these added benefits can be added in different combinations, or they might not be included in your Mortgage Insurance Policy at all. These benefits are called riders. Some examples of riders you may be able to choose from are:

  • Spousal Rider: Covers a spouse if he or she dies before or with the person covered on the Mortgage Insurance Policy .
  • Accidental Death Rider: Pays an additional death benefit if the insured person dies in an accident.
  • Accelerated Benefit Rider: Pays a percentage of the death benefit to the family before the insured person dies to help cover expenses related to terminal illness.

Riders may add unnecessary expenses within your Mortgage Insurance Policy, or—in the case of a spousal rider—they could be an inexpensive way to add a great benefit to your Mortgage Insurance Policy.

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Medically Underwritten vs. Non-Medical Mortgage Insurance Policies

Some people don’t think to buy a Mortgage Insurance Policy until they encounter a major health problem. Once you’ve been diagnosed with heart disease, cancer, or encountered any serious medical illness, you may be considered uninsurable on medically underwritten Mortgage Insurance Policies. If you're still insurable, the added premiums assessed to your policy to compensate for your health condition can be enough to make your Mortgage Insurance Policy unaffordable. In this situation, a non-medical Mortgage Insurance Policy can be the perfect solution for you. Non-medical Mortgage Insurance Policies are never medically underwritten, so you'll be insurable (unless you’ve been diagnosed with a terminal illness). With this type of policy, your rates are based soley upon your age when you apply, your gender, whether or not you use tobacco, the death benefit you apply for, and the term length of your Mortgage Insurance Policy.

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Fraternal Group and Union Insurance

If you're a member of a union or a fraternal group, such as the Knights of Columbus, you may be eligible for group term life insurance benefits. These policies, while generally affordable and useful to some extent, do not replace the need for a Mortgage Insurance Policy. Group insurance through an organization is only valid while you're a member of that organization. These policies are not portable; when you leave the organization or the organization is disbanded, you're left without any insurance coverage. At that point, you must go through the application & underwriting process for an individual Mortgage Insurance Policy. Not only is your family unprotected while you apply, but you may also be subject to higher rates due to health issues and advanced age while you were insured by the fraternal group or union. The sooner you get a Mortgage Insurance Policy, the better. This way you can lock in your rates with your current age and health.

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The Term Length of Your Mortgage Insurance Policy

In considering a Mortgage Insurance Policy, one aspect you'll need to evaluate is the term length of your policy—how many years your Mortgage Insurance Policy will last. The term length of your Mortgage Insurance Policy will generally be the same as the number of years you have left to pay on your mortgage. But since you're taking out the Mortgage Insurance Policy at a younger age than you'll be at the end of your mortgage, and since your health may decline, it's wise to design your Mortgage Insurance Policy to extend longer than the term length of your mortgage. Your Mortgage Insurance Policy can protect many different forms of debt in addition to your mortgage. It can also serve as income replacement to your spouse and college tuition for your children. To ensure you're getting the most out of your Mortgage Insurance Policy, purchase a policy that provides the longest term length available. Make sure that your Mortgage Insurance Policy will have the locked-in rates you’ve been approved for well after you no longer qualify for them.

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Important Riders to Consider

Riders can help make your Mortgage Insurance Policy more tailored to your specific needs and concerns. By adding riders (policy add-ons that create additional benefits), you can ensure that your Mortgage Insurance Policy is secure and that you have continued coverage even after the term has ended. A waiver of premium rider is a rider you can choose that protects you and your loved ones if you become disabled. With a waiver of premium rider, your Mortgage Insurance Policy remains active for the entire length of the term, and all premium payments will be waived. The waiver of premium rider carries an additional cost, and you'll need to prove your disability based on the insurance company’s requirements. A conversion feature is a rider that allows you to convert your Mortgage Insurance Policy to a permanent (universal or whole) life insurance policy. This will allow you to keep your Mortgage Insurance Policy if your Mortgage Insurance Policy is about to expire, and you know you need the coverage for a longer period of time. All Mortgage Insurance Policies already include the conversion rider free of charge.

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