Mortgage Insurance In BC: What Is Used to Price Mortgage Insurance Premiums?
How much you pay for your mortgage insurance premiums will hinge largely on three factors. If you compare a similar policy, you may get different premiums, based on the size of the loan, and the condition of the owner (age, smoker or non smoker).
Both kinds of mortgage insurance-life to pay off the mortgage, or disability to continue mortgage payments-use these three things to determine the premium.
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 out are. Many mortgage life and disability policies do 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 arises from a condition that they can prove to be known to you at the time the policy was issued. Many smokers think they can hide this fact and keep the premium lower, and believe the insurance companies won't know. They will know, and if you have made incorrect statements on the application, you can jeopardize the entire policy.
Recognizing this limitation, many companies now offer Regular (for smokers) and Non-tobacco, which is for applicants who do not currently use tobacco or have not used it within the prior twelve months period. Needless to say, this increased risk is built into the various premiums.
Needless to say, if a policy is going to cover anyone without looking at his physical health, there is a built in premium increase for that. Anyone who has exceptional health should think about getting a physical examination, since the premiums will be much lower.
Age is a big piece of the way premiums are calculated, and if you compared a quote for a 38 year old, same size loan, same length left on the mortgage, it would be less than half that of a 50 year old. Reducing the principal on the mortgage adjusts the premium by mere dollars, so it is easy to see that the actuarial tables are what drives this calculation. None of this is surprising, since the insurance business is based on increasing the collection of premiums and delaying paying of policies.
The amount of the mortgage willhave an impact on the cost 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 command a higher premium and the insurance company will also require an assessment to prove the value of the property.
Both kinds of mortgage insurance-life to pay off the mortgage, or disability to continue mortgage payments-use these three things to determine the premium.
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 out are. Many mortgage life and disability policies do 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 arises from a condition that they can prove to be known to you at the time the policy was issued. Many smokers think they can hide this fact and keep the premium lower, and believe the insurance companies won't know. They will know, and if you have made incorrect statements on the application, you can jeopardize the entire policy.
Recognizing this limitation, many companies now offer Regular (for smokers) and Non-tobacco, which is for applicants who do not currently use tobacco or have not used it within the prior twelve months period. Needless to say, this increased risk is built into the various premiums.
Needless to say, if a policy is going to cover anyone without looking at his physical health, there is a built in premium increase for that. Anyone who has exceptional health should think about getting a physical examination, since the premiums will be much lower.
Age is a big piece of the way premiums are calculated, and if you compared a quote for a 38 year old, same size loan, same length left on the mortgage, it would be less than half that of a 50 year old. Reducing the principal on the mortgage adjusts the premium by mere dollars, so it is easy to see that the actuarial tables are what drives this calculation. None of this is surprising, since the insurance business is based on increasing the collection of premiums and delaying paying of policies.
The amount of the mortgage willhave an impact on the cost 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 command a higher premium and the insurance company will also require an assessment to prove the value of the property.
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