You can be sure of three main factors determining the cost of your mortgage insurance. If you compare a similar policy, you may receive different quotes, based on the size of the mortgage, and the condition of the owner (age, smoker or non smoker).
Both mortgage life (to assure payment of the home loan at the death of the insured) and disability (to provide income for paying the mortgage in case of the disability of the insured) use the same factors to price the premiums.
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 how much it will cost. Many mortgage life and disability policies do not need a physical, merely 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 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 assume the insurance companies can’t know. But if the reason for death or disability can be related to the hidden condition, the policy can be cancelled, 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, the increased risk is built into the different premiums.
It also has to be realized that any policy that doesn’t have a health screening will have an automatic premium built in to cover additional risk. So those who are in very good health should consider taking the physical to see if lower premiums are available for him.
These factors can have a great effect on premiums, and the premiums for a 50 year old, with the same size mortgage, will be more than twice as much as that of a 38 year old. Lowering the loan amount insured will not change the premium that much. That age has the biggest impact should not be surprising; the insurance increases its collection period and decreases its payout period.
The mortgage amount has an affect at a certain level, however. But up to about $250,000, the savings are low per each $10,000 lower value. But once the value of the home that is insured starts to go up, the insurer will require a complete application and an individualized quote, and of course, the property itself will have to be assessed.