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 provide disability insurance as part of a package of programs like unemployment insurance and workers compensation insurance. It works similar to an unemployment program but comes into play if you can’t work because you are ill or injured, not because there is no work.
Some policies cover illnesses related to the job, but many cover any illness or injury that prevents you from working. A company’s disability insurance program is usually a low cost benefit given as part of a group insurance program.
Disability insurance normallyusually only replaces some of one’s full income, many times not more than half. If you have a home loan to pay, this may seem very inadequate, since a mortgage payment can take up to half of one’s income in many cases. And since your home is probably your most important asset, youshould want to protect it.
This is the part that where mortgage disability insurance is intended to play. When you do become disabled, when you subscribe to mortgage disability insurance, you will have the money to pay your mortgage each month, and your regular disability payments can be earmarked for other living expenses.
If you have mortgage life insurance, it will take care of your family’s obligation to pay off the mortgage in the case of your death. 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 current until you were able to return to work so you don’t have to risk losing your home? This is the question mortgage disability insurance addresses.
In addition, as is the situation with so many of today’s households, both breadwinnrs can be covered if they both contribute to the payments. 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 give you the cash for you to pay your mortgage or up to two or three years, depending upon the policy. These payments are done in addition to any other disability insurance you may be getting.
You have to understand the terms under which you can use the policy; they differ greatly. It is important to understand all of the features of the policy before you sign up with an insurance policy, for example 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 find the most cost effective.
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