Homeowner's insurance doesn't pay the mortgage if you're disabled.
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It’s a homeowner’s nightmare: Becoming sick enough that you can no longer work, potentially causing you to miss house payments and lose your home. While homeowner’s insurance protects you against fire, weather damage and theft, it does not protect you if you are unable to pay your mortgage each month. Fortunately, there are a variety of other insurance types that can help cover the mortgage in case of illness or job loss.
Homeowner’s Covers Home Issues
For anyone with a mortgage, homeowner’s insurance is mandatory. It’s designed to help make sure the property maintains its value, protecting you and the lender. Homeowner policies vary from state to state, but in general, they cover fire, downed trees, vandalism, broken water pipes, storms and wind. If anyone is injured on your property, that’s covered, too. And while
earthquakes, floods and sewer backups are not part of standard coverage, you can add riders to your policy that will cover them. What’s not covered, however, is your actual mortgage. Should you get sick and be unable to work, or lose your job, you would need to have other types of insurance coverage.
Mortgage Protection Insurance
Just as the name implies, mortgage protection insurance is designed to protect your mortgage in the event you can’t pay. It’s essentially a type of life insurance that pays your mortgage if you lose your job, become disabled or die. Mortgage protection insurance is typically issued on a “guaranteed acceptance” basis -- a major benefit for someone who has existing health issues or works in a high-risk occupation. Mortgage protection insurance can be paid as a separate bill, just like auto insurance, or it can be worked into your monthly mortgage payment.
Long-term Disability Insurance