Nothing focuses the mind as much as how much you are worth than buying a house. With one or two signatures, you now own a major asset! No wonder you are thinking about mortgage life insurance protect your asset any way you are able to.
That is fine if you pass on, but the more likely occurrence is that you will be disabled, and neither you nor your loved ones will be able to stay in your residence since you cannot work.
If you desire to set up a disability insurance program, you can consult an insurance broker. This professional will perform a complete analysis of your income and housing requirements; don’t forget that your home loan is only a part of the whole cost of living in your home.
If you already have disability insurance from work or a government program, don’t expect that to cover what is most likely your single largest expense, your mortgage. All your other debt has to be paid as well while you are disabled. This can mean car payment, your credit cards, your other insurance policies, etc. You will quickly see that your stand alone disability policy is not going to be sufficient to cover your mortgage and other home related costs, in addition to these other expenses.
The options you have to be aware of when choosing mortgage disability insurance are the benefit period, the elimination (or waiting) period and any riders that may exist.
Very simply, the benefit period is how long you will receive payments. Normally the benefit period will extend until age sixty five, but savings in costs can be realized if the benefit term is shortened. Perhaps a younger spouse will start collecting social security, adding to the family income, or you may be able to tap your tax deferred retirement funds at 59 .
Question the broker about the elimination period, the length of time you have to wait before you start collecting. Needless to say, the longer the waiting period, the less the premiums. If you have saved for a rainy day, this may be it, and you can save a lot of premium costs if you have these funds to cover you for a while.
A rider is an added coverage that you may choose to add onto your insurance. A common rider is a cost of living rider, that will increase the payout according to recognized cost of living increases.
Since there are so many options to examine, it is vital to know them before you buy mortgage disability insurance. Make sure you choose the policy that will save you the most money as well as be best for your needs.