Because the policy benefit is lower, underwriting requirements for mortgage income insurance are much lower than for traditional coverage. In fact, many policies don’t require a medical exam.
Therefore, mortgage income insurance may be an option for homeowners who can’t qualify for traditional long-term income insurance. This way, at least part of your budget will be covered by income insurance benefits. It can also supplement a group disability policy in the event you can’t medically qualify for traditional long-term income insurance.
Individual long-term income insurance is the better option if you can get it for the following reasons:
- It is designed to replace your income in the event that you're no longer able to work, which means the benefit should cover your mortgage in addition to your other expenses
- Mortgage income insurance will not cover all mortgage-related expenses without an optional rider that will add to your cost. Base coverage only covers your principal and interest payment, not your homeowners' insurance or property taxes.
- Mortgage income insurance also does not cover payments on home equity loans.
- Mortgage income insurance benefits generally decrease over time as your mortgage balance decreases. However, your premium cost will remain the same
If you feel you need more than what your current income insurance coverage provides, you’re likely better off with a supplemental income insurance policy. The benefit of a supplemental policy can be used for whatever is needed, not just your mortgage.