mortagesandforeclosures

by Michael M. Callender

You can be sure of three main factors determining the premium of your mortgage insurance. For any given policy with all the same features, the premiums will be determined 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 continue mortgage payments-use these three things to calculate the premium.

Since the age and condition of the insured is one of the most important determinants of when a policy will be paid, they are the most important determinant of the premium. Many mortgage life and disability policies will not need a physical, only 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 written. Don't think you can claim that you are a non smoker and then collect on the insurance because the insurance company didn't realize. 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.

The two types of policies on offer are regular, which includes smokers and non smokers, which of course, doesn't. Needless to say, this increased risk is built into the various premiums.

It also has to be realized that any policy that does not have a health screening will have an automatic premium built in to cover additional risk. Anyone who has exceptional health should consider getting a physical screening, since the premiums will be much lower.

Age is a big piece of the way premiums are priced, and if you compared a quote for a 38 year old, same mortgage, same length left on the loan, it would be less than half that of a 50 year old. Even a much lower mortgage will not have that great an affect on the net premium for the policy. None of this is surprising, because the insurance business is calculated on increasing the collection of premiums and delaying paying of policies.

The amount to be be insured is, of course the next prime concern of the policy. But up to about $250,000, the savings are small per each $10,000 lower value. Larger mortgages command a higher premium and the insurance company will also insist on an assessment to prove the value of the property.

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