The concept behind 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 have disability insurance as part of a package of programs such as unemployment insurance and workers compensation insurance. It works similar to an unemployment program but kicks into play if you can’t work because you become ill or injured, not because there is no work.
In addition, there are disability insurance policies that will give you a salary if you become injured or ill unconnected with your job. Disability insurance is frequently a benefit given by employers at a low rate since it is part of a group package, and employees can have the right to subscribe to more if they prefer.
Disability insurance does not cover all of one’s salary, but usually more than half of it. This may not seem enough to a lot of people, who today are paying half of their salaries just to keep up with their mortgage payments. And since your home is probably your most valuable asset, youwill want to protect it.
This is where mortgage disability insurance takes over. When you carry this kind of insurance, your mortgage is paid by the policy, even if you have other disability insurance.
If you have life insurance of sufficient size, or mortgage life insurance, your family would be able to pay off the mortgage should you pass on. But would your family be able to pay the home loan if you became sick or disabled and could not work? Would the mortgage be kept up until you were able to return to work so they don’t have to risk losing the family home? A mortgage disability insurance policy would provide enough funds to make the mortgage payments during the period you cannot work.
If need be, and this is probably the case in most homes, this insurance can cover both wage earners in one household. If you or another covered member of your family is disabled in an accident that is covered by the mortgage insurance policy, the insurance coverage will provide cash for you to pay your mortgage or up to two or three years, depending upon the policy. Any other disability payments should not be disrupted.
The terms on which the policy can be called differ from company to company and even from policy to policy. It is important to be clear on all of the features of the policy before you commit to 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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