How to pay for life insurance

If you’re a new life insurance policyholder or if 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 lost coverage, unless you have disability coverage or a policy with a cash value.

Accepted payment methods vary by insurer. Most providers allow payments by check or electronic bank transfer, 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 initial life insurance premium 

The approved payment methods for your first life insurance payment vary by provider, but the most commonly accepted forms are personal check, cashier’s check, or an electronic funds transfer (EFT). 

Your provider may accept a credit card for your first premium payment, but only accept check or bank transfer thereafter. 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 that you are insured while your application is being processed. Premiums for temporary coverage are based on the initial quote you received when you applied for coverage. 

Even fewer companies accept credit cards for temporary life insurance payments (and none of Policygenius’ partner insurers do). If you pay by EFT, your insurance agent may ask you to share bank information over the phone rather than filling out a form as you would to initiate recurring payments.

How to make recurring life insurance payments

Once you’ve bought a policy, most providers require you to pay your monthly or annual premiums by check or EFT. Your insurance agent can identify which forms of payment your provider 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of the easiest ways to avoid a policy lapse is to set up a recurring bank transfer so that premiums are automatically withdrawn on the same day each month or year.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online form that includes the bank account and bank routing number for the account from which you’d like your premiums withdrawn.

Monthly vs. annual premium payments

The insurer might offer you the option to pay your premiums monthly or annually. If you choose to pay annually, you could save up to 5% on your insurance premiums. But even with a discount, paying a full year of premiums up front can be difficult to fit into your budget. Choose the option that’s best for your financial situation.

Do life insurance companies accept credit cards?

You might prefer the ease of paying your premiums with a credit card, but it’s not a common option after your initial payment. 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.

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. 

During the COVID-19 pandemic, some states are requiring insurers to extend grace periods if you can prove financial hardship caused by the pandemic. Your insurance company can provide you with their specific guidelines for grace period extensions.

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.

How to pay for life insurance if you become disabled

The waiver of premium for disability rider allows you to waive premium payments if you become disabled. You can add this rider to your policy for a flat additional cost that varies for each life insurance company.

Though it’s one way to keep your life insurance in force if your disability affects your finances, it can be difficult to qualify for this rider. If you’d like more robust disability coverage, we recommend purchasing a separate long-term disability policy.

How to pay for life insurance with cash value

If you have permanent life insurance you might be able to pay premiums with your policy's cash value amount. The cash value of a life insurance policy usually takes decades to earn interest, but once it has grown you could use the accumulated value to pay your life insurance premiums for a short period.

No life insurer will allow you to pay for your policy with cash, and few will let you pay for more than your initial premium with a credit card. If you don’t want to use a personal or cashier’s check, an EFT is a reliable, technology-friendly way to ensure you make your insurance payments. Speak with your life insurance agent or consult your policy to confirm the payment methods accepted by your insurer.