How much you pay for your mortgage insurance premiums will depend largely on three things. For any given policy with similar features, the premiums will be fixed by the size of the mortgage, 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 condition of the insured is one of the most critical determinants of when a policy will be paid, they are the most important determinant of the premium. A great many mortgage insurance policies do not even need a physical. Just because a physical is not needed, don’t think you can hide a serious health condition or the fact that you are a smoker. Smokers, especially have to be careful of taking a chance on that ever present question: “How will they know?” They will know, and if you have made false statements on the application, you may jeopardize the entire policy.
Recognizing this limitation, many companies now offer Regular (for smokers) and Non-tobacco, available for applicants who do not now 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.
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 components 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. Reducing the principal on the mortgage changes the premium by a few dollars, so it is easy to see that the actuarial tables are what drives this calculation. That age has the biggest impact should not be a surprise; the insurance increases its collection period and decreases its payout period.
The mortgage figure has an affect at a certain level, however. Prior to the $250,000 threshold, though, there is not a big impact on prices. Larger mortgages command a higher premium and the insurance company will also require an assessment to prove the worth of the property.