How much you pay for your mortgage insurance premiums will depend largely on three factors. For any given policy with all the same features, the premiums will be fixed by the size of the loan, the age of the homeowner and whether or not he is a smoker.
Both kinds of mortgage insurance-life to pay down the mortgage, or disability to pay mortgage payments-use these three things to calculate the premium.
The age and health of the insured is of the utmost importance to the insurance company, since they will determine for its actuaries what the chances of paying out are. Many mortgage life and disability policies will not require a physical, merely a statement of health condition. It is very risky to claim good health without it, however, because the insurance company can deny any claim if it comes from a condition that they can prove to be known to you at the time the policy was issued. Smokers, especially have to be careful of risking that ever present question: “How will the company know?” The answer is, they will know; if you have a debilitating heart attack, the cause can almost always be found, and you will have paid all those premiums and still left your family unprotected.
There are two basic policies, regular, which includes smokers and non smokers, which does not (and also includes those who have not smoked during the last 12 months.) The smoker’s policy is of course bound to be more expensive than the non smoker’s.
Needless to say, if a policy is going to cover someone without looking to his physical health, there is a built in premium cost for that. Anyone who has exceptional health should think about getting a physical screening, since the premiums are much lower.
These factors can have a great effect on premiums, and the premiums for a 50 year old, with the same amount of mortgage, will be more than twice as much as that of a 38 year old. Lowering the loan amount insured does not change the premium a great deal. That age has the biggest impact should not be a surprise; the insurance increases its collection period and decreases its payout period.
The mortgage amount has an affect at a certain level, however. Prior to the $250,000 threshold, however, there is not a great impact on prices. But once the value of the property insured starts to go up, the insurer will require a full application and an individualized quote, and of course, the property itself will have to be assessed.
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