Mortgage Disability Insurance

Mortgage disability insurance is really a specialized form of disability insurance. What mortgage disability insurance promises is to make your mortgage payments in the event that you are disabled and cannot.

In my experience, mortgage disability insurance is generally a consumer rip-off. For the dollar amount of the benefit versus the dollar amount of the premium it is one of the most expensive insurances you can buy. On the other hand, your lender may offer it. Further, they may strongly encourage you to take it.

In general, you should avoid mortgage disability insurance. If you have other disability insurance through your work, or privately, you will likely get all the coverage you need at a better price. Further, with disability insurance you are only allowed to receive a certain amount of benefit (based on your salary at the time you became disabled). In most cases, the benefit is between 50% and 70% of your salary at the time you became disabled. Buying additional disability benefits will not result in more money to you. Your mortgage disability policy is likely to have a clause which prevents it from paying monies to you unless your other disability coverage is less than 50 % of your regular earnings.

Read all fine print carefully. Do not be fooled, even when this coverage is recommended to you. If you can get disability coverage through your work it is a better deal, dollar for dollar.

If you have no other disability insurance this may be a product for you. However, be sure to check all the details of your policy and ensure that the price is right with some comparison-shopping.


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