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Mortgage Life and Disability Insurance

Discussion in 'Money Talk$' started by Bible Believing Bill, Aug 8, 2007.

  1. Bible Believing Bill

    Bible Believing Bill <img src =/bbb.jpg>

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    The above quote was speaking of mortgage life insurance. I tend to agree with that statement requarding mortgage life.

    My question is what do you think of mortgate insurance that will make your monthly payment if you become disabled? I did not take out this type of insurance on my mortgage, and it definatly would have been to my benefit. Had I taken out this type of policy then for the last four years it would have paid my house payment because my wife is disabled.

    Am I the excpetion to the rule? What do yo see as the pros and cons of mortgage disability insurance?

    Bill
     
  2. FriendofSpurgeon

    FriendofSpurgeon Well-Known Member

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    In specific instances, it could be a better buy. However, normally a general long-term disability policy would be better. Also, by all means, stay away from any short term disability policy unless it is paid for by your employer.
     
  3. TomVols

    TomVols New Member

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    I'd tend to agree with that. STD (the insurance, not the disease :)) is generally insurance that replaces savings that you'd have built up to cover living expenses for a short period of time. LTD insurance is a good bet. STD requires such elimination periods and has so many hoops that you never know if you can collect it or not. Sometimes, it's a month or more before you get a check. You're better off if you can take matters into your own hands and save. Take the premium you'd pay for the STD and sock it into a savings acct (or better yet, a money market) and let it grow.
     
  4. webdog

    webdog Active Member

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    Mortgage insurance is a form of life insurance. It's life insurance that covers the mortgage only.
     
  5. TomVols

    TomVols New Member

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    Truthfully, when I sold mortgages, I never encouraged people to take this option. Term life is the way, because it follows you wherever you go, whereas MLI dies when you sell your home or refi it.
     
  6. mandyjune

    mandyjune New Member

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    Yeah I figured that too with mortgage life insurance. I'd rather get the term as well like what bible believing Bill said.

    Honestly, with all the other kinds of insurance we need like dental and medical, getting insurance for the home just gets kinda overwhelming. What do we really NEED? although I live in California, earthquakes are happening quite often on this side of town.
     
  7. TomVols

    TomVols New Member

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    One thing to keep in mind: flood insurance is extra if you live in a flood plain. Flood damage will often not be covered under most homeowners policies.
     
  8. FriendofSpurgeon

    FriendofSpurgeon Well-Known Member

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    Correct, you will need separate flood insurance (it is a federal program, but can be purchased via your regular agent) for flood damage. So here in FL, you need regular homeowners insurance, windstorm (hurricane) insurance, and flood insurance (if you live in flood zone). One thing to remember about flood insurance is that there is a policy maximum of $250,000. So if your home is worth more than that, you're on the hook for amount above the $250k.
     
  9. billwald

    billwald New Member

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    > Had I taken out this type of policy then for the last four years it would have paid my house payment because my wife is disabled.

    ??? Exactly how would that work? Say The Wife and I were issued a joint life insurance policy that would pay off 100% of face value if only one of us died . . . how would that differ from what you suggest regarding disability insurance? Wouldn't it require two disability policies, each costing the full amount that would be charged for one person?

    Federal flood insurance - welfare for people who live in a flood plain.
     
  10. FriendofSpurgeon

    FriendofSpurgeon Well-Known Member

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    I really don't know how mortgage disability works when both spouses work, but only one is disabled. I'm sure the coverage ranges quite a bit based on whatever option you initially chose. They probably issue only one policy (due to one mortgage), but the options may differ.

    Regarding federal flood insurance, this is insurance not welfare and the costs can be rather steep. Plus, as mentioned above, the max liability is only $240,000.

    Primarily, the individuals should do all they can to protect themselves. Loads of ways to do this regarding landscaping, drainage, etc. In addition, the local governments should develop the proper flood protection for their citizens. Again, loads of ways to do this including developing canals, installing pumps, etc. Flood insurance should be a last resort.
     
  11. billwald

    billwald New Member

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    OK. Mortgage insurance is basically an expensive decreasing disability policy with the bank as the beneficiary.
     
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