3 Unexpected Types of Insurance You Need as a Homeowner

Your home is your biggest investment, so it goes without saying that you’ll do anything to protect your property. This is why you have homeowners insurance to covers damage to your property and belongings in the event of theft, fire or natural disaster. Additionally, homeowners insurance provide liability coverage if someone is injured on your property. If you're financing your home through a bank, your lender will require homeowners insurance. And depending on where you live, you may have earthquake insurance or flood insurance. You might think this is all the coverage you need. However, if you really want to protect your investment, there are three other insurances to consider.

1. Life insurance

Some people put off purchasing life insurance, but tragedies can happen at anytime. If you have children, a spouse or other relatives who rely on your income, a life insurance policy provides your loved ones with financial support in the event of your untimely death. At the end of the day, you want your family’s life to continue as normal as possible. If you're the primary breadwinner or contribute to the household expenses, losing your income might force your family to move out of your home and they might struggle to make ends meet. Life insurance policies can provide peace of mind. The death benefit can cover your funeral costs, pay off the house and other debts, plus provide your family with ongoing financial support. There are no hard or fast rules regarding how much coverage to receive, but some experts recommend purchasing a policy that’s eight to 10 times your annual salary if others rely on your income.

2. Payment protection insurance

In addition to life insurance, you can purchase mortgage payment protection insurance from your mortgage lender. Many lenders offer this supplementary insurance policy, which is similar to a life insurance policy, but the death benefit is paid to your mortgage lender. Mortgage payment protection pays off your home loan if you die. Typically, you have to request payment protection when buying a house, but some lenders let borrowers add coverage anytime within the first three to five years after a purchase. Payment protection premiums are based on different factors, such as your age, whether you’re a smoker and the outstanding mortgage balance. Premiums are paid monthly and included in your mortgage payment.

3. Disability insurance

Take advantage of short-term disability insurance if offered through your employer, or look for a policy on the individual market. Disability insurance provides income if you’re temporarily unable to work due to an illness, injury or other medical reasons. This income can cover living expenses and help you stay current on your mortgage payment, which can alleviate payment problems and possible foreclosure. The amount you're eligible to receive varies depending on the insurer. For example, some insurance companies offer short-term disability policies that’ll pay up to 60 percent to 70 percent of earnings, whereas other companies only pay up to 40 percent to 50 percent of earnings. Unfortunately, you won't find a disability policy offering 100 percent coverage.

Bottom Line:

Life insurance, payment protection insurance and disability insurance aren’t “only” for homeowners — anyone can benefit from protection. But as a homeowner, you can’t afford to skip coverage. Home is where you’ll raise your family and create memories for years to come. So you need to do whatever you can to protect your biggest investment.