Does Homeowners Insurance Cover Your Mortgage if You Become Sick?

Find out which types of insurance cover your mortgage.
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Buying a home is probably the biggest investment you are likely to make, and the last thing you want is to lose your purchase through foreclosure. If you become sick and can no longer work, you need to know how you will pay your mortgage. Health insurance would typically cover all or part of your medical bills, but not your mortgage. Your homeowners insurance does not cover your mortgage, either – but you have other options.

Homeowners Insurance

Homeowners insurance typically covers the home if it becomes damaged in a natural disaster such as a hurricane, a fire, hail or a lightening strike. This applies to detached buildings on your property as well. You typically need to buy an extra policy for floods and earthquakes. Homeowners insurance also covers your possessions up to a certain dollar amount, living expenses while your home is being repaired, personal liability if someone sues you for becoming hurt in your home or on your property (this includes harm caused by pets) and medical payments to pay medical bills when there is no lawsuit.

Critical Illness Insurance

Critical illness insurance is one way to cover your mortgage if you become sick. This insurance kicks in when you are diagnosed with a covered illness or condition. Some conditions that could be covered are heart attack, cancer, stroke, organ transplant, paralysis, kidney failure, blindness or deafness. You would receive a lump sum payment that you could use to pay your mortgage.

Disability Insurance

You might be able to get disability insurance through your employer. This type of insurance would typically cover half your salary up to a certain amount. You can also get your own coverage. A private disability insurance policy typically covers 50 percent to 70 percent of your income. After you have received disability insurance for a set period, typically two years, you would be required to file for Social Security Disability Insurance or Supplemental Security Income if you have not earned enough to qualify for SSDI.

Mortgage Protection Insurance

Mortgage protection insurance covers your mortgage if you become sick or if you die. It is another form of life insurance. If you die, mortgage protection insurance would pay your mortgage so your heirs would own the home. If you become sick or lose your job, mortgage protection insurance would pay your mortgage for a year or two in most cases. Ideal candidates for this type of insurance are people with health issues who cannot get or afford life or disability insurance. With mortgage protection insurance, you are guaranteed acceptance.

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