Disability Insurance for mortgage covers all the payment for the ongoing mortgage you owe within a period if you are disabled due to accident, injury, illness and the others. All this can stop you from carrying out your usual job duties before this disability. This is usually purchased alongside mortgage life insurance.
Disability Insurance can be considered as an important aspect in your monetary plan, especially when you have kids or other people depending on you. This could be so difficult to resolve if medical conditions are occurring already such as cancers, musculoskeletal disorders, diabetes, etc.
Some of these disability insurance policyholders will have to eliminate those conditions from an individual’s disability insurance if they occur already when you apply, or else this will make the coverage so expensive. The main issue is, nearly half of all foreclosures result from disability or medical issues based on the fact there was no insurance.
What Is Mortgage Protection Insurance all about?
In general, mortgage disability insurance secures some or the entire of your monthly mortgage bill if anything bad happens that makes you stay away from work for a long period.
Most of these mortgage disability insurance helps you in paying off the entire loan you have collected in case you die. Different insurance companies have their mortgage disability policies. Therefore, you need to know what their insurance policy provides.
Furthermore, there is an option that allows you to buy a mortgage protection insurance policy. You do not have to be desperate to buy mortgage insurance from one insurance company. If you will what their insurance policy doesn’t favor you, you can go get another insurance company. Other factors determine the rate of your mortgage insurance such as age, gender, health, current payoff, etc.
If you buy mortgage insurance that is capable of paying off your loan when an emergency occurs. The insurance company will have to send a cheque to your lender for the present payoff amount on your mortgage loan. This helps your next of kin not to deal with an apartment that has a mortgage loan attached to it. Rather, they will cover up a definite amount that is specified in your mortgage contract.
Most people don’t know the difference between mortgage protection insurance and private mortgage insurance. The former secures you as a borrower, while the latter goes back to the lender if there is a default on your mortgage. Even though many lenders provide the insurance, this is not built to secure them.
What Period Does Mortgage Disability Insurance Benefit Covers?
The payment of mortgage disability insurance covers after the initial waiting period and will still go on until you resume your work or you attain an elected period, and this is typically 24 months. This disability insurance for a mortgage will help you to pay a maximum monthly benefit in addition to the disability insurance premium for your mortgage.
What is the cost of Mortgage Disability Insurance?
The cost of mortgage disability insurance depends on your age when you are applying, and the current amount of your monthly mortgage payment. Sometimes, this mortgage disability insurance is being sold as a component of a product bundle. This can involve – job loss insurance, mortgage life insurance, and critical illness insurance. All the various types of insurance protection policies are being offered under a group insurance policy other than an individual insurance policy.
How to calculate Mortgage Disability Insurance Premiums?
We have seen the factors that affect the rate of the mortgage. Another influencing factor is the kind of occupation you do. For example, if your occupation involves more risks such as construction, onshore, pilot, mining, and others. This means your premiums will be so high compared to working inside an office.
Generally, premiums are usually paid once or twice every twelve months or monthly depending on the case. If you are disabled, then your policy payments are given directly to the lender before they get back to you. That is the way the entire process is carried out.
Riders on Mortgage Disability Insurance
In most cases, mortgage disability insurance policies are sold as a rider scheduled through a mortgage term life policy. What a disability driver does is to offer monthly income above the range which has been specified within the insurance policy if you stay away from work. But most of these mortgage insurance protection plans often provide at least one of these riders such as:
- The Return of Premium rider.
- Involuntary Unemployment.
- Expenses associated with Your Mortgage rider.
1. The Return of Premium rider:
Here, the rider allows you to obtain the whole amount of your premiums that you have made payment for your disability plan before your policy gets to terminate. This opportunity comes with an extra cost.
2. Involuntary Unemployment:
Unfortunately, if you get a sack letter from your workplace, this rider can help you to cover up for some or all the mortgage payments for some periods which are specified in the insurance policy. This kind of insurance is the only insurance that will make payment for you if you lose your job.
3. Expenses associated to Your Mortgage rider:
Here, the rider can pay for extra expenses that are related to mortgages such as homeowner’s insurance or real estate taxes.
Where you can get Mortgage Disability Insurance?
Mortgage lender provides this type of insurance protection for all its customers. You can decide to check round to see the one that will fit your insurance policy based on your price range. If you are healthy, you can decide to find an individual or group disability insurance (short or long term).
Advantages of Disability Insurance for Mortgage
1. Protecting one’s biggest assets:
An apartment can be a huge investment, and conventional life insurance takes place only when you have passed away, whereas this insurance policy secures your house payments if you become disabled.
2. Peace of mind:
When you have the right disability insurance for your mortgage, you don’t have to bother yourself about losing your job or becoming disabled because you have insurance coverage for your properties.
Disadvantages of Disability Insurance for Mortgage
1. No room for flexibility:
Here, you have no say on how the money is used. All payment goes to the mortgage company, and if you sell your apartment, you don’t get any portion of the money.
2. Declining benefit:
You will be asked to make a regular premium payment, as your mortgage decreased as time goes on, with the benefit amount. It is not ideal to keep this insurance policy if you are drawing close to pay off your mortgage.
Disability Insurance for a mortgage can offer you valuable insurance protection if you stay away from work due to emergencies or eventualities. Then if you have serious health issues, this disability insurance will cover for your mortgage.