Farm Insurance

Once you have decided to purchase mortgage disability insurance, it is important to understand what you are being offered. So as to compare the various policies that will be shown to you, you have to be aware of and understand each feature and its impact on the policy premium.

First of all, be sure you are clear on the policy’s definition of disability. This is a critical component, especially if you have a highly specialized career. Make sure whether it covers whether it covers “own occupation” or any occupation”. Own occupation means it is what you are qualified to do, and if you can no longer perform this job, your income will be severely cut back. This feature means the policy will only cover you if you are nable to perform any occupation, no matter what it is. A pilot who could no longer fly, for instance, may be able to do some other job for his former company.

If you expect to make a comparable salary if you are disabled, but you opted for the “Any Occupation” definition, you may not be eligible for your disability insurance and be forced to take a low paying job. Make sure you have coverage for “Own Occupation” which means as a pilot you can no longer fly.

The benefit period is also an important component to make your comparisons about. The typical benefit period is to age 65, but if you are in a position to supplement your sa;ary in some way before the age of 65, you can substantially reduce your premiums. This may include your spouse’s eligibility for social security benefits, qualification for early retirement benefits from your employer, or the ability to tap a qualified retirement account early, at 59 for no penalty withdrawals, for example.

The next area to look at is the benefit amount of the mortgage disability policy. The actual mortgage payment should be insured. However, if you have lost your entire income, will you be able to keep up with taxes, hazard insurance and maintenance? Of course, covering these will increase the premiums, but it is worthwhile to do the cost/benefit analysis.

Be sure you understand and are clear on these basic features of any policy you are offered. In addition, be clear the riders that will be shown to you.

One of the most popular riders is the inflation protection rider. With this, the amount of the benefit increases with the rate of inflation. Since prices are always going up, this is something that should be considered. There are two kinds, simple, whereby a percentage is added to the benefits, or compound, which compounds previously added increases.

Various riders you may be offered are non cancelable policy, guaranteed renewable policy, guaranteed future insurability and waiver of premium.

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.