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Mortgage Disability Insurance

By Derren Peters

Unless you strike it rich through the lottery, keeping up with your mortgage payments requires getting up and going to work each day. But if an illness or injury prevents you from going to work, mortgage disability insurance acts as a safeguard to help you keep your home. As statistics show that a disabling, on-the-job injury occurs every second in the United States ? there's another one as you read this ? this type of insurance policy can be crucial to protecting your income and home.

With a disability income insurance policy, you pay a periodic premium. In the event you become disabled at some point, the insurance company will pay you a monthly benefit to replace a percentage of your income and make up for your inability to earn a living. Policies cover paid sick leave, and long and short-term disability benefits.

The definition of "disabled" may vary with each insurer. As disability insurance is a contract between you and the insurance company, the insurer will have their own standards for determining your eligibility for benefit payments. The broadest coverage policies define disability as an inability to perform the required duties of your occupation. The narrowest coverage policies define disability as your inability to work in any job at all. Naturally, a broader coverage policy is more expensive.

Insurance companies don't sell disability policies that replace 100 percent of your income. Most insurers offer coverage for 60 to 70 percent of what you make. If you're considering this type of insurance, it's advisable to buy as much coverage as you can afford, unless you bring in substantial income from other sources (i.e. an investment portfolio)

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