With the fluctuating housing market conditions worldwide, many people continue to struggle with their mortgage payments while the others are still not able to fulfill their dream of purchasing their dream home. Different circumstances can lead to this situation but thankfully, there’s help on hand.
The income protection insurance is one solution to this issue. As its name suggests, this type of insurance coverage ensures that policy holders continue to receive an income notably if they are unable to work owing to an illness or disability. It can be either short term or long term depending on one’s need for funds.
The short-term cover also known as the accident, sickness and unemployment (ASU) product, normally provides income for one to two years. The income can be for general use and not necessarily for a specific debt hence, it can be used to pay for your mortgages. Those having difficulty paying their homes and need a specific product, however, can choose to avail of a mortgage payment protection insurance.
The long term protection, on the other hand, provides a steady income for an indefinite period until the policy holder is fully recovered from his illness and is fit to return to work. Do take note that there is usually a waiting period or what is known as a deferred period before the payout starts. This can take from one day to as long as 104 weeks.
Mortgage Protection Insurance
Basically, a mortgage protection insurance will help you pay for your monthly mortgage bills for certain periods of time such as when you lose your job or become disabled due to a car accident. It can also pay off an entire mortgage loan in the event the borrower passes away.
Car accident attorneys may also advise victims of vehicular accidents to take advantage of this coverage particularly if they could not still go back to work for an indefinite period. This way, they have peace of mind that their family will not suffer financially during the recovery stage. Many people who are not able to get a life insurance due to their age or medical condition are relying on this as well.
The cost of this type of insurance varies depending on one’s situation. Normally, it will be based on one’s age, health, current value of your home, amount of your regular payment and the current payoff amount of your mortgage. If disability is your reason for availing of this, the cost will depend on the industry in which you work. As an example, the premiums will be lesser for an office worker compared to a miner whose job has more risks involved.
One of the downsides here is the policy can’t provide the amount of money equivalent to your monthly wage in case you get terminated from your job. What the amount you receive, instead, would depend on your contract policy. As such, make sure to determine first the other benefits you can get from your employer should you be unable to work. The statutory sick pay covers 28 weeks and then you can rely on state benefits afterwards. Some employers also provide group income protection insurance for employees.