Mortgage Disability Insurance: An Overview

A disability in a working person’s life can bring havoc. It can bring a whole financial chaos indeed. You lose your earning power which makes it much more difficult to pay back the debts and worse is when you fail to bring back something which you have mortgaged.

Often in a time of crisis, people mortgage their belongings such as property. However, a mishap like death or disability at that point of time can weave a complete financial as well as mental trap for a person and/or one who is lived out by him. Thus by signing a mortgage disability insurance policy in good times, you save yourself from such possibilities.

What is mortgage disability insurance?

Mortgage disability insurance is a tailor made product designed to provide financial cover for mortgage of property to disabled. This policy is generally quite affordable and is meant for two-income family, who can insure jointly. This is offered by many insurance firms nowadays as financial traps of this kind are quite common these days.

Mainly, this insurance policy is designed to insure you against the mortgage of your home. So this policy provision is meant for those who have mortgaged their home for some or the other reason.

Types of mortgage insurance policy

Generally in the market there are two kinds of mortgage insurance policy which cover different kinds of mortgage deals.

The first one is quite involuntary. For example when you buy a house with a down payment less than 20% of the price, you are required to pay out the premium long after the mortgaged money has been covered.

The second one is the voluntary policy which is quite similar to the scheme which pays mortgage in the event of the insurer’s death or illness.

Making the decsion to sign the policy

Acquiring mortgage disability insurance is a serious and complex decision. It should take into account your entire financial situation. In the event of the insurer’s disability one’s income has to be replaced for a variety of reasons and not just paying mortgage loans. Therefore, it largely depends on the insurer’s earning power and how strong are the prospects for disability or death.