mortagesandforeclosures

by Michelle C. Forshee

Nothing concentrates the mind as much as how much you are worth than buying a home. In an instant, you are responsible for an asset probably worth hundreds of thousands of dollars. This type of responsibility leads people to consider protecting this asset in case of their death with mortgage life insurance.

This protects your family if you are gone, but what protects you, what keeps you in the home if you are unable to pay your mortgage in case you are disabled and unable to work and earn your normal salary?

The best way to determine how much you will need in terms of disability insurance is to consult with a financial planner or a life insurance agent. This professional will perform a complete analysis of your income and housing needs; don't forget that your home loan is only a part of the entire cost of living in your home.

Even if you already have disability insurance from a government program or from your place of work, this is usually based on a "maximum qualifying" debt to income ratio of 36 to 50. You have to look at all of your debt when you consider being disabled. You may have a car loan, credit cards and other fixed expenses that you have to continue to pay. Your disability policy will be unlikely to cover all of those costs and your mortgage expenses as well.

Make sure you are clear on the basics before you go shopping for mortgage disability insurance, such as what the benefit period is, how long the elimination period is and what riders are available.

Quite simply, the benefit period is how long you will get payments. This is usually through 65 years of age, but if you can shorten that amount of time, you can save a lot in premiums. For instance, if your spouse may be collecting retirement benefits before then, or if you can start withdrawing your own retirement benefits without penalty.

The next area of concern is the elimination period, how long your disability must exist before you can collect. Extending this period is one way to lower premiums. If you are in the habit of saving for emergencies, these funds may carry you over for a period of time before a longer term benefit is needed.

A rider is an added coverage that you may choose to add onto your policy. One of the most common is an inflation rider, that increases the benefit as the cost of living increases.

understanding all of these options can be difficult, but it is important to be aware of what exists. This is the only way you will be able to choose the right insurance for you.

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