A Guide to Mortgage Protection Insurance Riders

What Are Insurance Riders?

Insurance riders, otherwise known as a floater, is an optional add-on to an insurance policy. These are meant to provide various types of benefits to a policy holder, depending on the rider. Different types of insurance will have different types of riders due to the nature of the payout and policy. 

When it comes to mortgage protection insurance policies, there are many different riders available. Given the similarity to life insurance, MPI will feature the option for riders that change when or how a policy payout is received or initiated.

With mortgage protection insurance, riders come into play when the applicant wishes to have additional coverage included in the policy. This coverage can include life events outside of death that might impact one’s ability to pay their mortgage.

Mortgage Protection Plan Riders

Critical Illness Rider

With this rider added on, a lump sum payment can be made according to the amount purchased if the homeowner is diagnosed with an illness covered by the rider.

The suggested amount is 12 to 24 months’ worth of mortgage payments, but homeowners can purchase up to 100% of the mortgage amount in case it is needed.

Unemployment Rider

Buyers may wish to add on the unemployment rider if it’s not already included in the policy. This covers the buyer if they lose their job involuntarily, as long as the reason for this is covered by the policy.

There may be a waiting period before coverage begins for this rider, but once it does start, it can cover up to six months of mortgage payments while the homeowner looks for a new job.

Return of Premium Rider

Some MPI companies will offer a rider that enables the buyer to receive a refund for all premium payments. Applicable fees can be deducted from this when it is used.

This can only be used once the policy term has ended and may not be able to be obtained if the mortgage was used for unemployment, illness, or other temporary reasons before the policy’s end.

Accelerated Access Rider

Although uncommon in mortgage protection plans, accelerated access is a type of rider that provides benefit before death. Examples include being diagnosed with a chronic illness or critical injury that makes paying a mortgage impossible.

Overloan Protection Rider

Overloan protection ensures that excessive loans or mortgages cannot be made against the mortgaged property. 

Primary Insured Rider

This insurance rider provides added benefit to the primary policyholder, in addition to that of the mortgage protection. This will usually come in the form of a life insurance policy. 

Additional Insured Rider

Similar to the primary insured rider, this provides added benefit coverage to additional household members not included in the mortgage protection plan. 

Children’s Insurance Rider

Another add-on for mortgage protection insurance can include a benefit for children who live in the originally-protected household, in the form of a life insurance policy.

Accidental Death Benefit Rider

While a natural or illness-caused death is already covered in a mortgage life insurance plan, accidental death may not. This rider protects the mortgage in the event the policy holder dies via an accident.

Waiver of Premium/Monthly Deductions Rider

In the event the insured party becomes incapacitated and unable to pay their mortgage before the age of 65, it is possible to receive a waiver of premium payments or monthly deductions.

Do I Need MPI Riders?

Depending on your health and financial situation, an add-on rider to your mortgage protection insurance plan may be beneficial. 

There are many options available to supplement your MPI, and depending on your needs, a certain rider may protect you from risks that you weren’t aware of. 

By getting a free mortgage protection insurance quote, you can find out which policy and riders are best for you.

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