Term Life Insurance Ontario: How Are Mortgage Insurance Premiums Decided
Posted on June 29th, 2009 in Blog |
You can count on three main factors determining the cost of your mortgage insurance. Given the same policy, the premiums may be different based on how large the mortgage is, how old the insured is, and whether it is a smoker.
Both kinds of mortgage insurance-life to pay off the mortgage, or disability to continue mortgage payments-use these three things to calculate the premium.
As in most insurance policies, the health and age of the insured have the most impact since it determines the possible chance the policy will have to be paid. Many mortgage life and disability policies do not need a physical, only a statement of health condition. It is very risky to claim good health without it, however, since 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 written. Many smokers think they may be able hide this fact and keep the premium lower, and assume the insurance companies won’t know. The answer is, they will know; if you suffer a debilitating heart attack, the cause can almost always be found, and you will have paid all that money and still left your family unprotected.
There are two typical policies, regular, which includes smokers or non smokers, which does not (and also includes those who have not smoked during the last 12 months.) Of course, a smoker’s risk is already priced into that policy.
It also has to be recognized that any policy that does not have a health screening will have an automatic cost 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 may quality for substantially lower premiums.
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 loan amount insured does not change the premium a great deal. It is not a surprise since, in addition to the risks of age and health, the risk of the premium being paid longer are much better.
The mortgage figure has an affect at a given level, however. Prior to the $250,000 threshold, though, there is not a big impact on prices. But once the value of the home that is insured starts to go up, the insurer will require a full application and an individualized quote, and of course, the property itself will need to be assessed.
