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Rules for Traditional "MOB" Premium Calculations (cont.)

The premium is not insured.
The interest is not insured.
The allocation of payment is first to accrued insurance premium(s), then to interest, and finally to outstanding principal. The premium is earned on a periodic basis but is never added to the outstanding principal balance.

Illustration of Traditional MOB Premium

$10,000 Amt. Financed, 12 Monthly Payments, 12% Simple Interest $1.00 per month per $1000, Level Payment - $894.11

		Payment Allocation			Life Insurance
Outstanding Balance	Payment	Insurance (1)	Interest (2)	Principal (3)	Cumulative Life Premium	Monthly Life Base	Principal & Interest Payment
$10,000.00	$894.11	$10.00	$100.00	$784.11	$10.00	$10,000.00	$884.11
$9,215.89	$894.11	$9.22	$92.16	$792.73	$19.22	$9,215.89	$884.89
$8,423.16	$894.11	$8.42	$84.23	$801.46	$27.64	$8,423.16	$885.69
$7,621.70	$894.11	$7.62	$76.22	$810.27	$35.26	$7,621.70	$886.49
$6,811.43	$894.11	$6.81	$68.11	$819.19	$42.07	$6,811.43	$887.30
$5,992.24	$894.11	$5.99	$59.92	$828.20	$48.06	$5,992.24	$888.12
$5,164.04	$894.11	$5.16	$51.64	$837.31	$53.22	$5,164.04	$888.95
$4,326.73	$894.11	$4.33	$43.27	$846.51	$57.55	$4,326.73	$889.78
$3,480.22	$894.11	$3.48	$34.80	$855.83	$61.03	$3,480.22	$890.63
$2,624.39	$894.11	$2.62	$26.24	$865.25	$63.65	$2,624.39	$891.49
$1,759.14	$894.11	$1.76	$17.59	$874.76	$65.41	$1,759.14	$892.35
$884.38	$894.11	$0.88	$8.84	$884.39	$66.29	$884.38	$893.23
0

$66,303.32		$66.29
Month Dollars of Coverage

How does MOB compare with single premium net payoff coverage for the same transaction data?

Results dependent on term of the transaction.
Minimal difference in premium and interest charges for short-term transactions.
Be sure to compare "apples and apples".
Single Premium is using $.65/$100/yr which translates to $1.00 per $1000 per month at 12 months.

The effective monthly rate (EMR) will increase as the term increases.
EMR @ 12 months is $1.00 per $1000 per month
EMR @ 60 months is $1.06557 per $1000 per month
EMR @ 180 months is $1.07734 per $1000 per month

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