What is Mortgage Disability Insurance?
Mortgage Disability Insurance covers your ongoing mortgage payments for a specified period of time should you become disabled due to illness or injury that prevents you from performing the regular duties of your occupation prior to your disability’s manifestation. It is typically purchased with Mortgage Life Insurance.
How does Mortgage Disability Insurance Work?
Here’s an example of how Mortgage Disability Insurance works:
When Patricia arranged a mortgage to finance the purchase of her new home, she was worried about how she would be able to make the monthly mortgage payments and keep her house if she became temporarily disabled due to an injury that prevented her from working.
She was concerned because she had little savings left after making her down payment on the home, and did not have any type of disability insurance in place already.
So when Patricia learned that she could secure Mortgage Disability Insurance at economical group rates from the financial institution that provided her mortgage, she decided to do so.
Several years later, Patricia was seriously injured in a car accident and could not work for nine months. However, after a short waiting period, Patricia’s Mortgage Disability Insurance kicked in and began making her $2,500 monthly mortgage payments. As result, Patricia was able to remain in her home without making mortgage payments until she fully recovered from her injuries and was able to return to work.
What period does a Mortgage Disability Insurance benefit cover?
Your mortgage payments will be covered after an initial waiting period (usually 60 days after you are diagnosed) and will continue until you go back to work or until you reach a designated maximum period of time – usually 24 months. This insurance will pay a maximum monthly benefit plus the disability insurance premium (including provincial sales tax) for your mortgage.
What does Mortgage Disability Insurance cost?
The cost of Mortgage Disability Insurance is determined by your age at the time of application, and the amount of your regular mortgage payment (including principal and interest). Mortgage Disability Insurance is sometimes sold as part of a product bundle that can include Mortgage Life Insurance, Job Loss Insurance and/or Critical Illness insurance. All types of credit protection insurance coverage, including Mortgage Disability Insurance, are provided under a group policy rather than being individually underwritten. This means more Canadians can be insured at economical standard group rates.
Is there a maximum monthly benefit amount that will be paid?
The maximum monthly benefit payable per mortgage will vary according to the terms of your policy, but the maximum will usually be in the range of $3,000 to $3,500 per month.