Disability Insurance Explained

When disability strikes, your financial picture changes. No one ever thinks they are going to become "disabled," which in their minds means wheelchair bound. The reality is that 30 percent of all people 35 to 65 will suffer a disability for at least 90 days and one in seven will be disabled for five years.

There is a disability caused by a motor vehicle crash every 30 seconds.

One out of every two mortgage foreclosures is due to a disability.

With these statistics one might ponder just how long can you survive without an income? Where will the money come from and how long will that money hold out? What will happen to your dreams and priorities?

The good news is that people are living longer. The bad news is that diseases that use to cause death are now leaving people disabled. With disability on the rise, one solution is disability income. There are two types of contracts.

Non-Cancelable - premiums are guaranteed level for the life of the contract unless benefits are increased.

Guaranteed Renewable - Company reserves the right to increase premiums should they experience unfavorable claims with entire occupational class in the state of issue. For both types of contracts, coverage is never cancelled as long as premiums are paid.

Three areas of disability include occupation, compensation, and medical complications. Factors taken into consideration are gender, age, state of residence, and medical history. A wide variety of disability products are available including individual, business overhead, buy-sell, retirement, catastrophic benefit, mortgage/loan protection, self-employed, government employees, professional athletes, blue collar, and police and armed forces.

Residual or partial riders are available as well. A residual rider means if you return to work in your own or new occupation and experience a minimum 20 percent loss of income due to your disability, this rider will make up the difference. A partial rider means if you return to work on a part-time basis, after a disability, a minimum 20 percent of your benefit can still be paid.

While disability insurance is often overlooked or put on the back burner, the benefits it provides are well worth the investment and should be part of each individual's financial plan.

To receive comparison quotes on disability insurance policies from the top carriers in the country visit QuoteRetriever.com

Mortgage Insurance or Life Insurance?

Americans looking to wrap up new home purchases might find that life insurance is a more flexible and less pricey alternative to mortgage insurance obtained through a bank, say personal finance experts.

While most agree it makes sense to cover large debts with insurance, some argue when it comes to mortgages most consumers treat it as an afterthought and don't realize that buying through a bank can be a "costly mistake."

"It is important that people know that mortgage insurance is just another piece of a comprehensive financial plan," said T. Reilly O'Neal, founder and president of the insurance Web site QuoteRetriever.com.

Part of the problem is that most consumers take out mortgage insurance when they close their financing deals with the bank without doing any price shopping ahead of time.

"And the reason is, because they (the banks) ask the questions at the time of the purchase: 'Would you like to have your house paid off if you die? Would you like to have your house paid off if you get sick?' " O'Neal said. "And who is not going to answer 'yes' to that?"

That emotional response, coupled with a lack of knowledge about alternatives, means that some consumers could be shortchanging themselves in the long run.

With mortgage insurance obtained from a bank, coverage decreases with every mortgage payment but the premiums show no corresponding decline.

"The amount of coverage of their mortgage protection decreases as the mortgage is reduced, however, the premiums stay the same," he said.

"That means their costs (per $1,000 of coverage) actually goes up as they bring down their mortgage debt. Whereas the amount of protection, when you own personal life insurance, remains fixed throughout the term."

Additionally, while mortgage insurance pays off the loan's outstanding balance, only the bank gets paid. In contrast, life insurance will relieve that debt, while often leaving something over for loved ones.

"Owning your own life insurance, you have options," O'Neal said, noting the leftover money could be used to pay for items such as a child's education, taxes and other expenses.

It's also "portable," meaning that consumers don't need to requalify for coverage during the term if they buy a new home or switch mortgage providers.

By contrast, those who purchase mortgage insurance through a bank would likely need to requalify with the new financial institution: "Potentially, when they do this, they could be older, they could be unhealthy and rates could be higher. Which means they may not even qualify."

Homeowners who are healthy and have a good family history can expect to see very reasonable premium for a term life insurance policy that protects their mortgage. A renewable and convertible term policy can be converted to a permanent product at any time without a medical exam.

Moreover, life insurance is not subject to sales taxes the way mortgage insurance is.

"Going apples for apples, life insurance owned personally is less expensive," O'Neal said. "That's why people really need to go to a professional to see how the insurance fits into the overall plan."

To receive a free, no obligation, insurance comparison and consultation visit www.QuoteRetriever.com. This site allows you instantly comparison shops insurance online without the sales pressure.