Canada Life Insurance Quote: Why Does Your Mortgage Insurance Cost What it Does?
Posted by Michael M. Callender on June 30th, 2009
How much you pay for your mortgage insurance premiums will hinge largely on three things. Given the same policy, the premiums may be different based on how big the mortgage is, how old the insured is, and whether it is a smoker.
Whether it is mortgage life insurance (insurance to pay off your home in the event of your death) or mortgage disability insurance (insurance that will pay your home loan if you are unable to work because of a disabling illness or accident we are talking about, the factors that fix the premium are the same.
The age and health of the insured is of paramount importance to the insurance company, since they will determine for its actuaries what the chances of paying off the insurance are. A great many mortgage insurance policies do not even require a physical. This can be risky, since any statement that would infer good health can be used negatively if the claim is processed and it turns out a health condition (or smoking) was kept from the insurer. Smokers, especially have to be careful of risking that ever present question: “How will the company know?” But if the cause of death or disability can be related to the hidden condition, the policy can be voided, and the insured would have paid premiums for nothing.
The two types of policies offered are regular, which includes smokers and non smokers, which of course, does not include smokers. Needless to say, the increased risk is built into the various premiums.
It also has to be recognized that any policy that does not have a health screening will have an automatic premium built in to cover additional risk. If you are in excellent health, you may be better off asking a quote for a policy that requires a medical exam; you could quality for substantially lower premiums.
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. Even a substantially lower mortgage will not have such a great an affect on the net premium for the policy. That age has the most impact should not be surprising; the compant increases its collection period and decreases its payout period.
The amount that will be insured is, of course the next prime concern of the policy. Up to about $250,000, the amount insured will not change the premium a great deal and will most likely fall within the quick quote easy application classes. Larger mortgages need a higher premium and the insurance company will also require an assessment to prove the value of the property.