Mortgage disability insurance

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PostPosted: Tue Aug 31, 2010 8:47 am   Post subject: Mortgage disability insurance  

I just wanted to make sure that my family members don't face any problems with our home even when I'm not there. So I got this mortgage life insurance. Now, the agent has come up with another offer - mortgage disability insurance. Is it really that important to us?


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Big_Ben
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PostPosted: Tue Aug 31, 2010 2:29 pm   Post subject:   

If you are healthy, you shouldn't have mortgage life insurance. A fully underwriten level term policy should be a much better value.



The same concep applies with disability coverage.


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dkafkajr
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PostPosted: Wed Sep 01, 2010 1:18 am   Post subject:   

Life insurance to cover just the value of a mortgage is fine. But it may be inadequate for the other needs of your survivors in the event of your premature death. As I teach this topic in my classes, just because the mortgage is paid off, the other expenses of homeownership do not end.



There will always be property taxes, property insurance, utilities, maintenance and repairs, not to mention food and clothing for children, income for a spouse, education funding, emergency funds, and money to pay off other debt -- student loans, car loans, credit cards, a second mortgage, who knows what else, but you?



Mortgage insurance will not do that. A more substantial term or cash value policy might be a better choice, with the term policy being less expensive. You could obtain a disability income rider from some companies instead of having to pay for a separate disability income policy.



Mortgage disability insurance is particularly suspect from the perspective that although your mortgage payments will be made if your disability lasts long enough to qualify for the benefit, but what about your other lost income needs? Food, clothing, utilities, taxes, etc. It won't pay for that. I'm guessing that an honest-to-goodness 60%-of-pretax-wage disability policy will provide most of the money you need to meet your monthly expenses, including the mortgage.



I think I see an agent with $$ in his eyes . . . commissions at your expense.



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PostPosted: Wed Sep 01, 2010 7:30 am   Post subject:   

Quote:
A fully underwriten level term policy should be a much better value.




Can you describe in brief what you mean by this fully underwritten level term policy?

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Balkans-territory
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PostPosted: Wed Sep 01, 2010 7:49 am   Post subject:   

I'm healthy, so is this mortgage life policy an unnecessary expense for me? Also would like to mention that I've a car loan, but no credit card debts nor any second mortgage!


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Big_Ben
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PostPosted: Wed Sep 01, 2010 4:03 pm   Post subject:   

Well i think if you are keeping all the holes covered then you can opt to go for the mortgage disability insurance because it may turn out to be vital if you become unable to move and go for work due to some accident or illness.

If you can easily afford it then go for it.



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PostPosted: Wed Sep 01, 2010 9:41 pm   Post subject:   

Quote:
Can you describe in brief what you mean by this fully underwritten level term policy?




Life insurance that can be used for any purpose. The death benefit will stay level instead of decreasing over time. The premium should be much less expensive per dollar of coverage.



Quote:
I'm healthy, so is this mortgage life policy an unnecessary expense for me? Also would like to mention that I've a car loan, but no credit card debts nor any second mortgage!




Did God tell you when and how you are going to die? If he did, it is an unnecessary expense. Otherwise, life insurance is needed if you have someone to protect. Life insurance is needed and not mortgage life insurance.

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PostPosted: Wed Sep 01, 2010 9:42 pm   Post subject:   

Mortgage disability coverage has terrible contractual terms. If one needs to protect their income, start by finding a reputable agent.


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sdlfjalru
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PostPosted: Thu Sep 02, 2010 5:10 am   Post subject:   

Quote:
If one needs to protect their income, start by finding a reputable agent.




Words of wisdom. Too bad they can't be posted in gold, because they're worth their weight in that metal.


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PostPosted: Thu Sep 02, 2010 5:15 am   Post subject:   

Quote:
Well i think if you are keeping all the holes covered then you can opt to go for the mortgage disability insurance because it may turn out to be vital if you become unable to move and go for work due to some accident or illness.




On the other hand, ill advice such as this can lead to irreparable harm.



Mortgage disability insurance, as I posted prior to this comment, may make the monthly payment on the loan, but it's not going to put food on the table, keep the lights on, or the home warm in the dead of winter.



If one is truly concerned about the need to (1) pay off a mortgage in the event of death or (2) sustain one's income in the event of a disability, then something other than "mortgage" life or disability policies are the proper prescription.



Better to proceed at full speed than to go about covering the challenges in life half-fast.


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PostPosted: Thu Sep 02, 2010 11:36 am   Post subject:   

Max,



This was what i was stressing at, it is certainly not provide you food but if you are earning well enough and are so much concerned about what will happen to your mortgage on the event of disability then you can think about buying that insurance policy.



Of course its better to get insured for your untimely death.



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PostPosted: Thu Sep 02, 2010 4:01 pm   Post subject:   

Quote:
if you are earning well enough and are so much concerned about what will happen to your mortgage on the event of disability then you can think about buying that insurance policy.




You are missing the entire point, and I think it's because you don't understand insurance products well enough.



"Earning well enough" stops when the disability occurs. How will the other expenses of life be paid for when the income stops because the person is disabled? Your naivete on this aspect of disability is glaring.



I would be more concerned about caring for my family's entire needs than simply paying the monthly mortgage payment. And that's what I communicate to my clients.



Same is true when it comes to death. Pay off all the debts, yes, but also leave additional resources for the family to draw upon.


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PostPosted: Thu Sep 02, 2010 10:08 pm   Post subject:   

Quote:
Of course its better to get insured for your untimely death.




Why? One's odds of dying during their working lifetime are less than their chance of becoming disabled.

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PostPosted: Fri Sep 03, 2010 7:01 am   Post subject:   

Quote:
Why? One's odds of dying during their working lifetime are less than their chance of becoming disabled.


True, but then think of the risks too. Even when you're partially disabled you may qualify for certain professions. Also, you'd be there to support your family with guidance.



On the other hand, when you're not there you family might come across hardships.
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PostPosted: Fri Sep 03, 2010 12:02 pm   Post subject:   

Max,



Thats right i am not as well aware as you are about different insurance products.

But then happens to the mortgage if the person becomes disabled and is not able to work?How to best cover that, will just disability insurance be enough?

I completely agree that one should strive to earn as much so that on an event of death you leave behind enough to pay off debts and some extra for your family to live off it.

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