Mortgage Disability Insurance: Coverage During Hard Times

Mortgage disability insurance is a specialized form of disability insurance which covers your mortgage payments if you are ever too ill or injured to work.

Usually, mortgage disability insurance only applies for a limited time, or pays only a limited amount per month. Depending on the policy, your payment would be about $1,000 to $2,000 monthly, for a period of two to five years. The payment amount is determined by your average salary at the time of your injury – usually the insurance payment is between 50% and 70% of your average monthly income. Some mortgage disability insurance policies also limit their payments if you are already covered by other types of disability insurance, or if your employer offers disability insurance. 

You would still be responsible for the balance of your monthly mortgage payment -- but any payment specifically targeted to your mortgage would allow you to use other disability payments or savings for other important expenses.

Most mortgage disability insurance policies require a waiting period, usually either 30, 60, or 90 days, before paying on a claim. You may be able to choose the length of the waiting period you would prefer – usually, the longer this waiting period, the lower your  monthly premium. If you have enough in your savings to cover a longer waiting period, it could lead to considerable savings on the cost of your policy.