Buying a home can be a serious businessaffair. Suddenly your assets have jumped by 50, 100 ,200%! You have probably already started considered protecting it via mortgage life insurance.
This protects your family if you are dead, 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 decide how much you will need in terms of disability insurance is to consult with a financial planner or a life insurance agent. If done correctly, you should have a total analysis of the total costs of maintaining your home compared to your expected income if you should not be able to work.
Even if you already have disability insurance from a government program or from your place of employment, this is usually based on a “maximum qualifying” debt to income ratio of 36 to 50. You have to consider all of your debt when you consider being disabled. This can mean car payment, your credit cards, your other insurance policies, etc. A standard insurance policy is unlikely to cover all of these besides your mortgage.
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.
The benefit period is the amount of time the benefit will be paid. Normally the benefit period extends until age sixty five, but savings in premium can be realized if the benefit period is shortened. Perhaps a younger spouse will start collecting social security, adding to the family income, or you may be able to take out some of your tax deferred retirement funds at 59 .
Question the broker about the elimination period, the length of time you have to wait before you can. Again, if you can extend this waiting time, your premiums will be less. If you have a nest egg that you can fall back on during the initial stages of a disability, you may be able to save considerable money on the policy.
A rider is an additional coverage that you can choose to add onto your policy. One of the most usual is an inflation rider, that increases the benefit as the cost of living goes up.
Viewing all of these options can be confusing, but it is important to be conscious of what exists. Make sure you choose the policy that will save you the most money and be best for your needs.
Tags: home, insurance, life insurance, mortgage, Mortgage Life Insurance, real estate