Is Mortgage Disability Insurance Worth It?

Do you have a plan to pay for your mortgage if an illness or injury leaves you unable to work? 

We know it’s not the most pleasant thing to talk about, but we should.

Mortgage disability insurance is designed to protect your home by covering some or all of your mortgage payments if you are unable to work due to a disability.

But is it the right choice for your financial situation? Let’s break it down.

What Is Mortgage Disability Insurance?

As we mentioned above, mortgage disability insurance provides financial protection by covering a portion of your mortgage payments if you are unable to work due to a disability or illness. 

Policies typically offer a monthly benefit, usually capped at a set amount (e.g., $2,500–$3,500 per month, depending on the provider). 

The payments continue for a specific period, often up to 24 months, while you recover or adjust your financial plan.

How It Works

Depending on your policy, there are some requirements you’ll have to meet prior to coverage kicking in. Typically, there’s a waiting period between 30–90 days.

Instead of receiving a lump sum, the benefit is paid directly to your lender or you, covering your mortgage payment until you can return to work or the benefit period ends.

What Disabilities and Illnesses Are Covered?

Coverage varies by provider, but most policies cover:

• Injuries from accidents that prevent you from working.

• Serious illnesses like cancer or heart disease.

• Chronic conditions that limit your ability to perform your job.

However, some pre-existing conditions or specific types of disabilities may not be covered. When you go through the application process, you’ll go through a health questionnaire to determine if this policy would be the right fit for you.

The Benefits of Mortgage Disability Insurance

1. Peace of Mind: Knowing your mortgage is covered allows you to focus on recovery instead of finances.

2. Protects Your Home: It keeps you from falling behind on payments and risking defaulting on your mortgage.

3. Easy to Qualify: Unlike traditional disability insurance, mortgage disability insurance often has fewer medical underwriting requirements.

4. Flexible Options: Some policies allow you to customize coverage amounts and benefit periods.

Is It Worth It?

That is the question! Whether mortgage disability insurance is worth it depends on your situation. 

If you already have long-term disability coverage through your employer or a significant emergency fund, you may not need it. The caveat here is that you make sure you have enough coverage through these plans to cover your mortgage.

However, if you have a mortgage and depend on your income to make payments, this insurance can be a lifesaver.

It’s like we say, insurance is about protecting who and what you love.

How to Get It

Mortgage disability insurance is often available through your mortgage lender, insurance providers or as part of a broader disability insurance policy. Often, you will receive it at the same time you secure your mortgage. We recommend keeping this insurance in place until you get settled into your home and have a full insurance plan in place.

Mortgage disability insurance isn’t one-size-fits-all, but it can provide critical financial protection when you need it most. If you’re unsure whether it’s right for you, we can review your current insurance coverage and financial situation together to help you decide.

Need help understanding your insurance options? Reach out today to find the best coverage for your needs!