What Other Types Of Insurance Do You Have Besides Homeowners, Auto, Health, And Life?
I just bought a house and I’m about to get married. I’m thinking I should have some kind of insurance that could pay the mortgage should I ever become unable to work since I am the main breadwinner and there’s no way my soon to be husband could pay all the bills himself. He could probably hack it without the mortgage payment, that would be the killer. Anyone in the same boat? What kind of insurance is the best for this, disability or mortgage insurance?
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You may want to look into an Umbrella policy. This will cover you if you should get sued for more than the coverage you have on your auto or home insurance. See your agent for details.
I recommend the you see a LOCAL agent and have him/her do a free Financial Need Analysis (FNA), or other Total Need program, to help YOU determine how much, and what type, or combination of, life insurance YOU need to reach YOUR own short and long-term goals and objectives. You will be given several options, YOU choose what best fits YOUR needs.
If an agent recommends an amount or a particular type of life insurance without doing the FNA, he/she is being unprofessional, and doing you a disservice. Remember, it’s YOUR plan, and NOT the agent’s.
The FNA will also help you dertermine if you need Disability Income Protection, to provide an income should you be hurt or sick and can’t work. This protection could keep you from losing your house if you couldn’t pay the payments while on disability.
The FNA will also help you determine if you need an Individual Retirement Account (IRA) to help you save for retirement. (All that will be there when you get there is what you send on ahead.)
According to statistics, disability is a greater risk than death prior to the age of 65.
Best wishes.
I think that the other poster hit this one dead on. Long term disability is the way to go if you are concerned about something like this. You may want to check and see if your, or your soon to be husband’s, employer offers a group rated long term disability package, as this is usually the cheapest way to go. Another insurance that you did not bring up concern for though, but is certainly a good idea for a home owner, is umbrella coverage. Many companies have different names for this type of insurance, but pretty much everyone knows of it as umbrella coverage. This insurance can add $1 million in liability coverage to extend beyond your home and auto limits, helping to protect your assets if there was ever a law suit following an accident or anything like that. This type of policy is usually just a couple of hundred dollars a year and can really save you by having it.
You’re talking about disability coverage. There are two kinds, short term, and long term. I think short term is a waste of money, you’re better off just saving up for that one. Many people rely on social security disability for long term disability – which can take a LONG time to activate.
You do NOT want to buy mortgage disability – if you’re buying ANY kind of insurance, you want it to pay YOU, not the lender.
Short term disability insurance is a good option if you are basically healthy and young when you first apply for it!
Try a large company like Aflac or call a local broker for comparison pricing.
(Rates are based on how much coverage you need/ how many weeks you can afford to be “disabled” before making your claim– i.e., 30 days vs. 60 days, etc.)
A very good idea with the new house, new hubby, etc! Good Luck!
Disability, definitely. Check with the benefits office at your work to see if they offer group plans – they are often more affordable then going out on your own.
Get at least 60% of your gross pay in coverage, make sure it is guaranteed renewable/non-cancellable, and that it provides coverage for any occupation up to age 65. That should be fine for a young person.
Disability insurance…one of the biggies for defaults on mortgages (prior to current economic environment anyway) is health and disability events.
I’m a medical professional so I also have professional liability coverage–but that’s not necessary for most careers.
Do NOT go for the kind of life/mortgage insurance that claims you make money on it because the truth is that you won’t (that’s great for the insurance companies, but not for you–you’d be better off investing that extra money elsewhere. Don’t listen to their slick sales pitches). Stick with fixed term mortgage insurance instead. Ie., if you die while you still owe a mortgage, the insurance will pay off the house–say, over a period of 30 years,the length of the mortgage. After that time the insurance stops. But since the house would be paid off after 30 years, your husband would only have to pay property takes on the home, maintenance, etc. This was the kind of insurance my husband got while I was raising our children.
Now we’re in a different house/different mortgage, but our children are out of the nest and my 64yo husband did not get life insurance this house around because he’s older and also because we have equity. Stick with straight short term since you’re probably young–it’s a lot less expensive. Don’t believe the people who tell you to get the kind of insurance ‘that you get money back on.’ These people haven’t done their math.
Like you said, ‘the mortgage payment would be the killer.’ That’s what straight term mortgage insurance is for. Especially if you have children.
UMBRELLA insurance is really worth it for the peace of mind it gives you for a slightly higher price. “Umbrella coverage” gives you coverage for the unlikely and unexpected things–like when my 16 yo daughter had a car accident, and the woman sued my daughter, my husband AND me for her husband’s questionable injuries (my husband and I weren’t even there! But, although it was my daughter who had the accident, it was MY car and my HUSBAND’s policy, so the woman sued all 3 of us for over $1 million! She didn’t get anything close to that; but our auto insurance at the time stopped at $500,000 per individual and it was the umbrella coverage that would have covered us for $1 million if necessary. The case went on for 6 years, an emotional hardship for my daughter and a fatiguing brain-drain for me and my husband. Again, it’s the peace of mind that goes with having umbrella coverage that makes it so worth it, esp. as your personal equity grows. It protects your personal savings.
So fixed-term mortgage insurance is the way to go, plus home-owners insurance with an umbrella.
ALSO–if you live in an earthquake prone area (as we once did, in CA) or a flood risk area, weigh the possible necessity of this extra insurance. We opted against the high-cost earthquake insurance (an extra $1,000/year, I think, with $5,000 deductible). Our home was never damaged. I don’t think any homes in San Jose have ever been damaged.
Flood insurance? Look into it if your home is in a risky spot. Because as more building takes place (and more ground is covered with cement), the risk to flood-prone homes increases.
A caution about certain health insurances: if you switch jobs, those ‘interim’ health insurances that cover you for 3-6 months or so? They aren’t worth it. There was an article in Time mag. recently about what a rip-off they are.
…and think about YOURSELF TOO, not just your husband. What if you have children and he dies and you need childcare? But of course, that can wait until your 1st child is born.
Buy your house, get straight term mortgage insurance plus an umbrella, and have a happy life!