If you’ve recently purchased or you’re considering purchasing a life insurance policy, you’ll need to decide how to make your policy’s premium payments. A reliable payment method is important since missed payments can lead to lapsed coverage.
Accepted payment methods vary by insurer. Most companies allow payments by electronic bank transfer and check, and most won’t accept credit cards after your initial premium payment. Ask your insurance agent or consult your policy to confirm your options and check for restrictions.
How to pay your first life insurance premium
You’ll fill out payment information on your life insurance policy documents. The approved payment methods for your first life insurance payment vary by insurance company, but the most commonly accepted forms are an electronic funds transfer (EFT), personal check, or cashier’s check.
Your insurer may accept a credit card for your first premium payment, but require a check or bank transfer for the rest of your payments. Cash is never accepted.
How to pay for temporary life insurance coverage
When you apply for life insurance, you can buy temporary life insurance coverage, so you’re insured while the company processes your application. Most insurance companies don’t accept credit card payments for temporary coverage, either.
Adding temporary coverage usually involves sharing EFT details along with your initial application online or over the phone. You’ll pay one monthly premium early in order to get covered during the application process.
How to make recurring life insurance payments
Once you’ve bought a policy, most insurance companies require you to pay your monthly or annual premiums by EFT or check. Your insurance agent can share which forms of payment your insurer accepts.
One of the easiest ways to avoid a policy lapse is to set up a recurring bank transfer so that premiums are automatically withdrawn on the same day each month or year. Usually, this is as simple as filling out a paper or online form that includes the bank account and bank routing number for the account from which you’d like your premiums withdrawn.
Should you pay your life insurance premiums monthly or annually?
Annual payments save you some money if you’re able to pay a larger sum upfront. Monthly payments can be more manageable for others. Whether you should pay monthly or annually depends on your individual circumstances, including your income and budget.
If you’re equally comfortable paying either way, it may make more sense to pay annually. Some insurance companies offer a discount for annual payments — generally between 3% and 5% — and you’ll only need to worry about a single payment per year.
Some insurers also give you the option to pay life insurance premiums semi-annually or quarterly, but fewer people opt for those options because there isn’t usually a meaningful price discount.
Which life insurance companies offer discounts for annual life insurance premium payments?
Most of the top life insurance companies offer a small discount for paying annually. These are the approximate discounts currently offered by Policygenius’ partner insurance companies in 2024 — the actual discount you receive will depend on your policy.
Company | Annual payment discount |
|---|---|
2% | |
2% | |
2.4% | |
4.76% | |
3.1% | |
3.1% | |
2% | |
2% | |
4.8% | |
4.8% | |
3% |
Learn more about top life insurance companies with our life insurance reviews
Do life insurance companies accept credit cards?
You might prefer the ease of paying with a credit card, but most insurers don’t allow this method of payment after your first premium. There isn’t just one reason that life insurance companies don’t accept credit cards, though high fees and state regulations are the most commonly cited.
Companies that do accept credit cards may not accept them in every state and may add a processing fee to every payment. If you pay premiums monthly, those fees can add up and outweigh the convenience of paying by card.
When do life insurance companies accept credit cards?
The chart below reflects how different insurers treat credit card use for term life insurance payments. Contact your insurance agent for details about accepted payment methods for other types of life insurance.
Company | Initial payment | Recurring payments | Temporary coverage |
|---|---|---|---|
Yes* | No | No | |
Yes* | No | No | |
No | No | No | |
Yes* | No | No | |
No | No | No | |
Yes* | No | No | |
Yes* | No | No | |
No | No | No | |
No | No | No | |
Yes* | Yes† | No |
*Option not available in every state. † May incur a convenience fee.
What if you can’t pay your life insurance premiums?
If you’re unable to pay your life insurance premiums due to job loss, disability, or some other major change in your finances, most policies include a payment grace period of 30 to 31 days after your payment due date.
Once that grace period ends, however, your policy will lapse due to nonpayment. To reinstate your coverage, you may be required to go through underwriting again and your premiums may increase if your health or age has changed since you first applied for coverage.
How to pay for life insurance with your cash value
If you have permanent life insurance, you might be able to pay premiums with your policy’s cash value. The cash value of a life insurance policy usually takes at least five to 10 years to gain significant interest, but after that period, some types of policies allow you to use those funds toward your premiums.
If you’re not sure if this feature is included in your policy, you can check your policy documents or contact your insurer.
Learn more about cash value life insurance
Frequently asked questions
Can you pay for your life insurance policy in full?
In some cases, you can pay for your entire permanent life insurance policy up front, but it’s not recommended due to cost and tax implications.
What happens if you can’t make your life insurance payments?
If you can’t make your payments, you can cancel your policy or let it lapse. Some insurance companies allow you to decrease your coverage while your policy is active, so you can contact your insurer to explore this option if you need cheaper payments.
Is it better to pay life insurance monthly or annually?
Some people find monthly payments easier to factor into their budget. But if you can afford to pay a lump sum up front each year, you may be eligible for an annual premium discount of up to 5%, depending on your policy and insurer.
