mortagesandforeclosures

by Gordon B. Cowen

The concept of any kind of disability insurance is simple: it is to provide salary in case salary is cut off due to accident or illness. Some states provide disability insurance as part of a set of programs such as unemployment insurance and workers compensation insurance. The concept is like unemployment insurance in that if your salary is stopped, in this case because you cannot work, not because you have lost your job, you will still receive an income.

There are workman's compensation disability policies, which are related to loss of job due to accident or illness on the job, but many policies cover all disabilities, job related or not. A company's disability insurance program is usually a low cost benefit given as part of a group insurance plan.

These kinds of programs are not intended to replace your old salary, since they usually only cover a maximum of about 2/3rd of it, and usually less than half. This may not seem adequate to a lot of homeowners, who today are paying half of their salaries just to make their mortgage payments. To protect what is probably your biggest asset, you may want to make sure you can manage your mortgage payments when you are sick for a while.

Your mortgage disability insurance is important in this situation. If you do become disabled, when you subscribe to mortgage disability insurance, you will have the money to pay your mortgage each month, and your regular disability payments can be earmarked for other living expenses.

If you have mortgage life insurance, it will cover your family's obligation to pay off the home loan in the case you die. But a disability can wreak a great deal of havoc, and life insurance will of course not help here. If you were unable to work for an extended period of time, would you or your family be able to pay the mortgage? This is the contingency that a mortgage disability insurance policy would be for.

If need be, and this is probably the situation in most households, this insurance can cover both wage earners in one household. If either you or your spouse were disabled, the insurance policy would pay the monthly payments so your home could be protected. Any other disability payments should not be affected.

There are different features to each mortgage disability policy, so be sure to understand each. It is important to be clear on all of the features of the policy before you sign up with an insurance policy, such as what illnesses and accidents will it cover and if there a time lapse before the insurance will "kick in". Then you can compare the premiums of each company with the benefits they offer to get the most cost effective.

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