Cost & Coverage
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The various ways to get your money to your insurance carrier.
One important consideration if you’re a new life insurance policyholder or if you’re considering purchasing a life insurance policy is how you’ll make the premium payments.
Not just how you’ll fit the payments into your budget — though finding affordable life insurance is a consideration, too — but how you’ll transfer the premium payment amount from your bank account into the insurance company’s bank account each month (or year, if you’re paying your premiums annually).
It’s not always as simple as handing over a credit card number or sending a PayPal payment. Paying for life insurance policies can vary across carriers.
The most commonly accepted forms of payment accepted by life insurance companies for your initial life insurance premium payment are personal check, cashier’s check or an electronic funds transfer (EFT). Cash is never accepted.
Many carriers let you make your first premium payment with a credit card (see table below). If you if you choose to pay annually, you may be able to save up to 8% on your insurance premiums.
Ask your insurance representative about payment options for your carrier.
When you apply for life insurance, many insurance companies give you the option to opt in to temporary life insurance coverage so that you are insured while your application is being processed.
The amount of temporary life insurance coverage varies by carrier: some offer a set benefit, but others will offer you the amount of coverage that you’ve applied for, up to a limit. The cost for this temporary coverage varies by carrier as well. Some insurers charge a flat fee for a set death benefit and others charge either a full month’s premium or a portion of a month’s premium, based on the quote from your life insurance agent.
Accepted forms of payment for temporary coverage also vary by company, but may include check, credit card (see table below), or electronic funds transfer (EFT).
When applying for life insurance, be prepared to share your bank account number and routing number if you’d like to opt in to temporary coverage.
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How you make recurring payments to your life insurance company also depends on your carrier. Most accept electronic funds transfers (EFT) and checks for life insurance premiums.
Even fewer insurance companies let you make recurring payments by credit card. In fact, of the life insurance carriers that Policygenius uses, only one life insurance company allows regular payments with a credit card: Transamerica. Even then, paying with a credit card may not be available to all policyholders in all states. Your insurance agent can help you understand the recurring payment options available to you.
If you become disabled, the waiver of premium for disability rider allows you to waive premium payments if you develop a disability after your policy is in force. This is a rider you add when you purchase your policy.
Read more about life insurance riders.
Many carriers have a waiting period for this feature — six months is common. You’ll need proof from a medical professional, and your policy will state what is required to meet the definition of disability; many require “total and permanent disability.” This rider has a set cost that varies with each policy, but if you’re worried about future disability, this could be one way to pay premiums and keep your life insurance policy in force.
Another option, if you have a whole life policy, is to pay premiums with your policy's cash value. Whole life policies are more expensive than term life policies and so term policies are the better choice for most people, but if you have a permanent life insurance policy with a cash value, you may be able to use the accumulated value to pay your life insurance premiums for a short period of time.
Read more about term vs. whole life insurance.
Many people would like the flexibility to pay premiums for life insurance with a credit card, but it’s not a common option in life insurance. There isn’t just one reason that life insurance don’t accept credit cards, though high fees and state regulations are the most commonly cited reasons.
N/A = Information unavailable at this time. Speak to a licensed Policygenius agent for more details.
Credit cards may not be accepted in all states, especially Alaska, California, Maryland, Nevada, New Jersey, New York, North Carolina, and Pennsylvania. Ask your agent what payment methods are available to you.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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Yes, we have to include some legalese down here. Read it larger on our legal page. Policygenius Inc. (“Policygenius”) is a licensed independent insurance broker. Policygenius does not underwrite any insurance policy described on this website. The information provided on this site has been developed by Policygenius for general informational and educational purposes. We do our best efforts to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Savings are estimated by comparing the highest and lowest price for a shopper in a given health class. For example: for a 30-year old non-smoker male in South Carolina with excellent health and a preferred plus health class, comparing quotes for a $500,000, 20-year term life policy, the price difference between the lowest and highest quotes is 60%. For that same shopper in New York, the price difference is 40%. Rates are subject to change and are valid as of 2/17/17.
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