Family Finance Help

You can be sure of three main factors determining the cost of your mortgage insurance. For any given policy with similar 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 mortgage life (to assure payment of the home loan at the death of the insured) and disability (to provide income for paying the mortgage in case of the disability of the insured) use the same factors to price the premiums.

The age and health of the insured is of the utmost importance to the insurance company, since that will determine for its actuaries what the chances of paying off the insurance are. There are policies that do not require that the health of the insured be certified by an examination. This can be chancy, 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. Many smokers think they may be able hide this fact and keep the premium lower, and believe the insurance companies won’t know. The answer is, they will know; if you have a debilitating heart attack, the cause can usually 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 over the last 12 months.) Of course, a smoker’s risk is already priced into that policy.

Keep in mind that insurance policies that are writable without a physical have already priced the additional risks into the premium. Anyone who has exceptional health should think about getting a physical screening, since the premiums are much lower.

Age and health are such important oarts of the calculations that a 50 year old with 18 years left on his $210,000 loan will pay more than twice as much as a 38 year old with the same conditions. Lowering the mortgage amount insured will not change the premium that much. None of this is surprising, because the insurance business is calculated on increasing the collection of premiums and putting off paying of policies.

The mortgage figure has an affect at a given level, however. Prior to the $250,000 threshold, though, there is not a great impact on prices. Larger mortgages command a higher premium and the insurance company will also require an assessment to prove the value of the property.