The post Mortgage Disability Insurance by Maurice Draine appeared first on Benzinga. Visit Benzinga to get more great content like this.
When you get hurt, injured or become diagnosed with a serious illness, you may face the unfortunate fact of being either temporarily or permanently out of work. It’s a hard realization to accept. Many people wonder how to pay their bills, including their mortgage. This is where mortgage disability insurance becomes beneficial.
A mortgage disability insurance policy makes it easier for you to recover, persevere and thrive after becoming disabled. It is a safety net providing additional coverage to ensure you keep your home even when you can no longer return to work.
window.LOAD_MODULE_LAYOUT = true;
Table of contents
[Show]
What Is Mortgage Disability Insurance?
Mortgage disability insurance is a policy you purchase voluntarily. It is a standalone policy that pays for your mortgage when you become injured, ill or disabled. The insurance company will use the current amount of your mortgage, your health status, age and your occupation to determine the amount of your premium.
Unlike a mortgage insurance policy that you typically purchase while closing the purchase of your home and signing paperwork for your mortgage, when you purchase a mortgage disability insurance policy, your lender will not be involved in any way. You will not receive any reminders that you need to purchase this type of policy or receive recommendations from your lender. Therefore, you need to conduct your own research to know exactly what you are looking for when taking out a mortgage disability policy.
There are several options out there for you to choose from, and you can set up a policy to start at the time of closing when you purchase your home. Doing so will further guarantee you are never without coverage. With illness and injury being so unpredictable, this is the optimal way to ensure you will always be able to pay your mortgage and keep your home protected no matter what the future holds.
How Much Does Mortgage Disability Cost?
As with all other insurance products, the cost for your mortgage disability insurance premium will vary from what everyone else pays. This form of coverage is often more affordable than traditional long-term disability insurance, but that is because the benefits are so limited. The best way to offset the high cost of mortgage disability insurance and any other form of coverage is to compare rates from different providers and choose the one that gives you the best premium for your budget along with the most practical benefits.
What Happens When You Are Disabled?
When you are injured in an accident that leaves you temporarily or permanently disabled, you are left with feelings of doubt and uncertainty as you wonder how you will pay your bills and survive in general. As you rethink your family’s budget and consider what debts you can cut out, there is one expenditure you cannot avoid and that is your mortgage.
If you become disabled because of an accident where someone else was at fault, you may receive compensation from a lawsuit that will help you take care of most of your debt. But many times, even after winning a case, people still need additional assistance with paying their most important debts.
Mortgage disability insurance can provide policyholders with a monthly income amount. This amount covers their mortgage principal and interest payments whenever the owner of the policy becomes disabled and is no longer able to return to work. It’s an ideal solution for those working in high-risk occupations who have a greater risk of injury while on the job, such as those in the roofing industry or construction business.
With the right mortgage disability insurance plan, you can reduce your risk of losing your home if you can no longer work for an extended period or permanently. Coverage is typically offered without a medical exam. The policy payouts are usually tax-free as long as the policyholder doesn’t deduct the monthly premium when taxes get filed each year.
An accident, injury or severe diagnosis can occur when you least expect it. Even the healthiest people who strive to take care of their overall wellbeing can end up disabled because of a car crash or a severe fall. Therefore, it is best to be prepared for the worst when it comes to protecting an investment as substantial as your home.
Does Mortgage Insurance Cover Disabilities?
Because mortgage disability insurance is linked to the mortgage on your home, it is different from traditional disability insurance policies that pay you a percentage of your salary after you are injured. It is also different from a mortgage life insurance policy that offers your beneficiaries a death benefit if you pass away before your home’s mortgage is paid off.
The primary mortgage insurance policy you took out when you first signed up for a mortgage is different because it protects the lender. The money you pay monthly on mortgage insurance will protect the lender from losing money if you cannot pay your mortgage for whatever reason. Unfortunately, it is not designed to protect you.
Another way your regular mortgage insurance policy is different from mortgage disability insurance is how payments are issued. With traditional mortgage insurance, the payments are issued directly to your lender when you can no longer make your mortgage payments on your own. However, with mortgage disability insurance, as well as long-term disability coverage, the payment goes directly to you so that you can make your mortgage payment to the lender on your own.
Mortgage disability insurance will help you pay for your mortgage principal and interest payments, thus allowing you to keep your home. While it will not provide you with additional income to take care of your everyday expenses like a long-term disability insurance policy, it will provide you with many more benefits than your basic mortgage insurance coverage. Therefore, it is best to look at all your options regarding insuring your mortgage and taking steps to provide you with the most benefits if the worst-case scenario happens.
Best Mortgage Disability Life Insurance Providers
Wysh is an online term life insurance provider offering flexible policy options available without a medical exam, just a few health questions. The company specializes in helping new policyholders choose a personalized policy fit. Wysh’s customer service team also helps policyholders’ beneficiaries communicate with creditors if their loved one dies.
Simple, straightforward and budget-friendly, Wysh is a strong option for entry-level life insurance applicants. Most users will also be able to apply in less than 10 minutes, making it a great choice for anyone in need of fast coverage.
Best For
- Term life insurance shoppers
- Anyone who doesn’t know what death benefits to choose
- Younger life insurance applicants
- Flexible term policies with death benefits up to $2.5 million
- No medical exam necessary to apply
- Enhanced customers service to help loved ones manage policy if policyholder dies
- Customer service team available through multiple channels
- Policies not available to those over age 50
Ladder offers policies with no hidden fees, on-the-spot underwriting and a streamlined website. Coverage ranges from $100,000 to $8 million and you can adjust your coverage over time as needs change.
You can choose a 10, 15, 20, 25, or 30-year term. Ladder also offers up to $3 million in coverage without a medical exam — just answer a few health questions and complete the application to get an instant decision.
Ladder doesn’t impose policy, cancellation or processing fees and you can cancel at any time. Take three steps to get Ladder insurance:
- You can apply for life insurance coverage with Ladder right now via the online application.
- Find out whether you’re instantly approved.
- Accept your offer — including affordable prices and no hidden fees.
Its price lock guarantee ensures your premium won’t increase as your health changes and you age. You can receive a refund within the 1st 30 days if you’re unhappy with your coverage and you can cancel at any time.
Best For
- Term life insurance
- Online application
- Policyholders between 20 to 60 years of age
- Up to $8 million in coverage
- Price lock guarantee
- No policy fees
- 30-day money-back guarantee
- Adjustable coverage
- No policy riders
- Term life insurance only
get started
Haven Life is an innovative life insurance agency that offers a simple way to obtain term life insurance for those between the ages of 18 and 64. You can choose a term length of 10, 15, 20 or 30-years. What’s unique about this term life insurance is the way you can complete an application online and, if approved, digitally purchase coverage.
Haven Life is backed and wholly owned by Massachusetts Mutual Life Insurance Company, a trusted A++ business. You’ll get a user-friendly experience from Haven Life and enjoy MassMutual’s financial strength. Haven Life focuses on personable customer service (it has a rating of 4.8 out of 5 stars) and convenient modern technology.
Best For
- Those looking for a digital buying experience
- Relatively healthy individuals with no preexisting conditions
- Individuals under the age of 64
- Those looking for affordable premiums with robust coverage and additional benefits
- Simple application process
- Instant decision on coverage. If approved, it can start immediately
- May not need a medical exam
- Competitive rates, more affordable than industry averages
- Excellent customer support
- No permanent life plans offered
- Higher rates for preexisting conditions
- No coverage if you’re over 65
Fabric offers term life insurance, free digital will creation and other tools to help you better your family’s financial life. They’re the one stop shop for young families looking for financial security.
Fabric offers 10, 15, 20, 25 and 30 year term options and coverage ranging from $100,000 to $5 million.
Fabric offers highly reviewed online customer service through its app and website and has the highest TrustPilot rating in its class.
Best For
- No exam required for most
- Those who want to avoid the hassle of insurance salesmen
- New or expecting parents looking for a broader suite of financial tools
- Affordable premiums
- Free digital will creation
- Free app with helpful tools for parents
- Apply and see your rate in less than 10 minutes
- No term life coverage in New York or Montana
- Can’t increase coverage after purchasing
Bestow offers 2 kinds of life insurance policies: 20-year level term policy or a 10-year level term policy.
Through its policies, you may qualify for up to $1 million in term life insurance. That may seem like a sizeable sum, but if you have a spouse and children, you have to consider the cost of things beyond your mortgage, such as daycare and eventually college, as well as the loss of wages over time.
Bestow uses its proprietary technology to underwrite your insurance policy, so the application process is much faster than with traditional life insurance companies. They’re also backed by Munich Re and North American Company for Life and Health Insurance, 2 A+ rated insurance companies.
Best For
- People who are looking for short-term life insurance
- Individuals who don’t want to go through the hassle of having a medical exam or blood work done to get coverage
- Plans start at just $8/month
- Decent coverage options if you need insurance quickly and without hassle
- Offers 2 types of plans; does not offer whole or universal life insurance policies
- The 10- and 20-year plans not available to users under 21 or older than 55
securely through Sproutt Life Insurance’s
website
One of most quickly growing life insurance platforms, Sproutt leverages insurtech to provide its Sproutt Instant approval life insurance. Get instant-issue policies in under 15 minutes from application to coverage. No medical exam necessary for qualifying applications.
This process is entirely online. You have the option to speak to an experienced Sproutt advisor for assistance or complete your coverage purchase on your own. It works with top-rated life insurance carriers like AIG, SBLI, Principal and Sagicor Life.
The company has also developed its Guided Artificial Intelligence Assessment (GAIA) platform to power the Quality of Life Index. The platform evaluates your lifestyle to offer personalized recommendations to help you live a healthier lifestyle.
Best For
- Numerous policy and carrier options
- Those who prefer no-exam life insurance
- Young parents
- Works with top-rated life insurance carriers
- Online process
- Diverse policy options
- An AI-based assessment delivers perks to those with healthy lifestyles
- Not best for unhealthy people on a budget
Protect Your Mortgage from Income Loss
Mortgage disability insurance is not as widely discussed as traditional mortgage insurance or long-term disability insurance coverage. So, it is common for homeowners to be unaware that these policies even exist. But fortunately, they are out there and available for you to purchase to ensure your investment is protected.
If you are interested in learning more about the many benefits of a mortgage disability insurance policy and how you can become a policyholder, be sure to check back with Benzinga often for insight into financial tips and tricks to help you thrive — even during the most challenging times.
Frequently Asked Questions
Who should consider purchasing mortgage disability insurance?
Anyone who has a mortgage and relies on their income to pay for it should consider purchasing mortgage disability insurance. It provides valuable protection in case of unexpected disability that prevents you from working and making your mortgage payments.
Can you get disability insurance on a mortgage?
You can voluntarily purchase a stand-alone long-term disability insurance policy or a mortgage disability policy that’s separate from the mortgage insurance you take out when you close on the purchase of your home. However, you will have to do this on your own because your mortgage company will not provide you with any insight or assistance for this form of coverage. Mortgage disability insurance is a great alternative option to fall back on if you cannot afford a long-term disability policy.
What happens to my mortgage if I become disabled?
If you become disabled, either temporarily or permanently because of an injury or illness and cannot work because of your limitations, the mortgage on your home still needs to be paid. While a mortgage insurance policy can be effective in helping you pay your premiums, it will not provide the same additional benefits as other insurance policies. That is why it is essential to look at all your options when looking for coverage to protect your home’s mortgage and choose the option or options that will provide you with the best possible financial outcome.
The post Mortgage Disability Insurance by Maurice Draine appeared first on Benzinga. Visit Benzinga to get more great content like this.
