Canada Mortgage Insurance: How Are Mortgage Insurance Premiums Decided
Three major factors determine how much you will pay for mortgage insurance protection. 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.
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.
Since the age and health 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. Just because a physical is not needed, don't think you can hide a grave health condition or whether you are a smoker. Many smokers think they may be able hide this fact and keep the premium lower, and believe the insurance companies won't 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.
Recognizing this limitation, many companies now offer Regular (for smokers) and Non-tobacco, available 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 different premiums.
Needless to say, if insurance is going to cover anyone without looking at his physical health, there is a built in premium increase for that. If you are in good 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 greatly affect 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 much lower mortgage will not have such a great an affect on the net premium for the policy. None of this is surprising, because the insurance business is based on increasing the collection of premiums and delaying paying of policies.
The amount that will be insured is, of course the next prime concern of the policy. But up to about $250,000, the savings are low per each $10,000 lower value. It is the higher priced homes that command the increased premiums and will usually need an assessment of the property.
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.
Since the age and health 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. Just because a physical is not needed, don't think you can hide a grave health condition or whether you are a smoker. Many smokers think they may be able hide this fact and keep the premium lower, and believe the insurance companies won't 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.
Recognizing this limitation, many companies now offer Regular (for smokers) and Non-tobacco, available 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 different premiums.
Needless to say, if insurance is going to cover anyone without looking at his physical health, there is a built in premium increase for that. If you are in good 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 greatly affect 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 much lower mortgage will not have such a great an affect on the net premium for the policy. None of this is surprising, because the insurance business is based on increasing the collection of premiums and delaying paying of policies.
The amount that will be insured is, of course the next prime concern of the policy. But up to about $250,000, the savings are low per each $10,000 lower value. It is the higher priced homes that command the increased premiums and will usually need an assessment of the property.
About the Author:
Thank you for your interest in our article.You may be interested in alberta best mortgage rates or mortgage insurance quote canada
You like it? Share it!
posted by SolveItQuick at
8:50 AM
0 Comments:
Post a Comment
<< Home