Life Insurance Premium Options
Life insurance is an important purchase, and one that no family can afford to live without. Even so, paying for that needed life insurance coverage can be quite difficult at times, and it is important for shoppers to find the best possible coverage at the lowest possible premium cost.
It is also important to choose a payment option that best fits your needs. Life insurance premiums can be paid in a number of ways, and it is important for every individual shopper to compare his or her options and choose a payment plan with care.
There are many different payment options available for life insurance policies, but the number of options for any particular policy may be limited due to company policy, the type of coverage and other factors. It is important for those who are looking for a new policy to ask about the various payment options and examine the advantages and disadvantages of each payment plan.
Perhaps the most common – and most popular type of payment plan is the monthly life insurance premium payment. This type of payment option has many important advantages, including low payments, ease of planning and more. Since the payments are spread out over twelve months the required monthly payments will be lower. Those lower payments make it easier for many people to budget and plan for the expense of the life insurance policy. In addition some life insurance companies provide their policyholders with an additional incentive by offering some kind of discount for automated payments made using a bank account or credit card. Those automatic payments can further lower the cost of coverage and make the life insurance premiums even more affordable.
Quarterly payments are another popular option, and this type of payment plan can also have a number of advantages. As with monthly premium payments, some life insurance companies may provide a discount for automatic quarterly payments made using a bank account or credit card. On the downside the payments will be quite a bit higher than their monthly equivalents, since the life insurance premiums are paid only one time per year. Policyholders who forget about an upcoming scheduled payment may find themselves scrambling for the funds to pay it.
The same is true of another payment option – the annual premium payment. The most significant downside of this payment plan is of course the high cost. Instead of being spread out over twelve months or four quarters, the entire yearly premium is due all at once. It can be difficult for many policyholders to come up with such a large sum of money all at once, and many people forgo annual payments in favor of one of the other options.
Of course an annual life insurance payment plan can have its advantages too, and it is important for policyholders not to dismiss this option out of hand. Some life insurance companies may offer a significant discount to policyholders who choose this option may be able to save themselves some serious money. In addition, timing the payment right can take some of the financial pain out of this option. For instance, some policyholders may choose to have their life insurance premiums come due around the same time their annual tax refunds roll in, making it easier to afford the payment and providing a ready reminder that the due date is on the way.
No matter what type of payment plan you choose it is important to budget for those payments effectively. The life insurance premiums should be a part of your monthly, quarterly or annual budget, not an unpleasant surprise.