mortagesandforeclosures

by Kevin S. Salin

There are a number of important components every homeowner should be aware of when considering the purchase of mortgage disability insurance. Make sure you understand the various features so you can have an intelligent comparison of every policy.

First of all, be sure you understand the policy's definition of disability. This is an important component, especially when you have a highly specialized career. Be sure whether it covers whether it covers "own occupation" or any occupation". Own occupation means it is what you are trained to do, and if you can no longer , your income will be severely cut back. An any occupation limitation says that you are not able to work in any field. If you were an airline pilot, you could be offered another menial job with the airline, for example.

This is a real possibility if you pick the Any occupation choice. Make sure you have coverage for "Own Occupation" which means as a pilot you can no longer fly.

The next area of question is the benefit period. The typical benefit period is to age 65, but if you are able to supplement your sa;ary in some way before the age of 65, you can substantially reduce your premiums. This may include your spouse's eligibility for social security benefits, qualification for early retirement benefits from your employer, or the ability to tap a qualified retirement fund early, at 59 for no penalty withdrawals, for example.

The amount of the benefit is another significant feature of the policy. The actual mortgage payment must be insured. But in addition, perhaps you should cover other home related expenses to make sure you can retain the residence, such as the property taxes, insurance and maintenance costs. Of course, insuring these will increase the premiums, but it is worthwhile to do the cost/benefit analysis.

Those are the basic components that will fix the coverage and premiums of your mortgage disability insurance. In addition, understand the riders that will be offered to you.

One of the most important riders is the inflation protection rider. Your monthly benefit will increase as the cost of living goes up. Since prices are always going up, this is something that should be considered. You may choose simple or compound inflation protection; the compound adds new increases to existing ones.

The broker may also discuss non cancelable policy, guaranteed renewable policy, guaranteed future insurability and waiver of premium as optional riders.

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