Mortgage Disability Insurance Is a Wise Move for Homebuyers

If you are in the process of purchasing a new home, one of the wisest investments that you can make is to purchase mortgage protection insurance.

This insurance covers your mortgage payments for a set period of time if you in the unfortunate incident that you become disabled due to an illness or injury that prevents you from engaging in the regular duties of your job that you were able to do prior.

In most instances, it is even purchased in conjunction with mortgage life insurance. 

How Does it Work? 

In short, mortgage disability insurance – which is often referred to as “mortgage payment protection insurance” – guarantees that your house payments will be paid if you are not able to work. It only pays enough to cover the monthly mortgage payments.

Most policies pay the amount for a period of one to three years, depending on the specified time frame outlined within the policy. The payments issued are paid directly to the lender. 

What Factors Impact the Cost? 

There are many factors that play a role in the overall cost of mortgage disability insurance. Examples include the balance of the loan on the home, your age, your overall level of health, and your occupation itself.

If you have a risky job – such as one in construction – you are more likely to experience higher rates for your coverage. The premiums may be paid quarterly, semi-annually, or annually. 

Does it Start as Soon as the Disability Occurs? 

No, mortgage disability insurance typically does not start as soon as the disability occurs. Most policies have a waiting period that is mandatory. This is referred to as an “elimination period”.

In most cases, it may be as little as 30 days or as long as 60 days immediately following the issue that has resulted in the development of a disability, be it an injury or an illness. 

Insurance Riders

Most homebuyers will obtain mortgage protection insurance and obtain an additional insurance rider of mortgage disability insurance.

Combined, these two coverages will cover the mortgage payments up to a certain amount or a certain time period in the event of illness, injury, or death.

Put together, these two types of insurance provide optimal protection for the homebuyer’s home. 

Is It Just the Mortgage Covered? 

Mortgage disability insurance will cover the interest and the principal of the monthly payments that are made on a home. There are additional riders that may be added to cover other expenses that are related directly to the mortgage.

These include items such as premiums for homeowners’ insurance, property taxes, and fees of the homeowner’s association governing the property. Naturally, the more riders that are added, the more expensive the policy. 

Contact Us 

If you are in need of any type of insurance for your home, we here at Modica Associates are capable of assisting you. We will work closely with you to determine your specific needs and we will then research and compare available coverage.

From there, we search for the most comprehensive coverage at the most competitive prices. To learn more, contact us now by calling: 718-855-1836

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