How to pay for life insurance

Most life insurance companies accept premium payments via bank transfer or check. Some let you use a credit card, but only for your first premium payment or with an added fee.

Nupur GambhirAmanda Shih author photo

Nupur Gambhir & Amanda Shih

Published August 25, 2020

KEY TAKEAWAYS

  • Life insurance companies accept check and bank transfers for recurring policy payments

  • Cash is never accepted as a form of payment

  • Most life insurance companies accept credit cards only for your first premium payment

  • Insurers that do accept credit cards for recurring payments may charge an additional processing fee

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.

It’s not just about how you’ll fit the payments into your budget — though finding affordable life insurance is important too — but how you’ll transfer the payment amount to the insurance company each month or year.

Paying for life insurance isn’t as simple as handing over a credit card number or sending a PayPal payment. Accepted payment methods vary by insurer, and while you can pay by check or electronic bank transfer, most companies won’t accept credit cards after your initial premium payment. 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.

How to make your initial life insurance premium payment

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). Many life insurers let you make your first premium payment with a credit card, but only accept check or bank transfer thereafter. Cash is never accepted.

How to make recurring life insurance payments

While you may have made your initial premium payment with a credit card, it is rare that a life insurance company will let you make recurring payments by card as well. Once you’ve bought a policy, most life insurers require you to pay your monthly or annual premiums by check or EFT. Your insurance agent can identify which forms of payment your specific 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of the easiest ways to avoid a policy lapse is to set up a recurring bank transfer so that premiums are automatically withdrawn on the same day each month or year.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 for the insurer 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 upfront can be expensive if your premium amount is high. Choose the option that’s best for your financial situation.

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How to pay for temporary life insurance coverage

While you apply for life insurance, you can get temporary life insurance coverage so that you are insured while your application is being processed. The amount of temporary life insurance coverage available varies by insurer: some offer a set amount, but others will offer you the same amount of coverage for which you applied, up to a limit.

The cost for this temporary coverage varies by provider 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. As with regular premium payments, accepted forms of payment for temporary coverage vary by company, but may include check or EFT and, in rare instances, credit card. Your insurance agent may ask you to share bank or credit card information over the phone to activate temporary coverage, rather than filling out a form as you would for recurring payments.

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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 for life insurers. 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.

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.

COMPANYINITIAL PAYMENTRECURRING PAYMENTSTEMP. COVERAGE
AIGYesNoNo
Banner LifeYesNoNo
BrighthouseNoNoNo
John HancockNoNoN/A
Liberty MutualYesNoNo
Lincoln FinancialYesNoNo
Mutual of OmahaNoNoNo
Pacific LifeYesNoNo
PrincipalNoNoNo
ProtectiveYesNoNo
PrudentialNoNoNo
SBLIYesYes†No
TransamericaYesYes‡No

N/A = Information unavailable at this time. Speak to a licensed Policygenius agent for more details. † Dependent on the type of policy you purchase ‡ With an additional convenience fee

Credit card payment may not be an option for all policyholders in all states, especially in Alaska, California, Maryland, Nevada, New Jersey, New York, North Carolina, and Pennsylvania. Some insurers accept credit card payments for some policies but not for others — for example, AIG accepts credit cards only for guaranteed issue whole life policies. Ask your agent what payment methods are available to you.

What if you can’t pay your life insurance premium?

Should you be unable to pay your life insurance premium 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 premium payment due date. During the COVID-19 pandemic, some states are requiring insurers to extend these 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’re disabled

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. You can add this rider to your policy for a flat additional cost that varies for each life insurance company.

Many insurers have a waiting period between when your policy goes in force and when you’re able to activate this rider — six months is common. You’ll need proof from a medical professional that you have a "total and permanent disability" to show that you meet your insurer’s definition of disability.

Though it’s one way to pay premiums and keep your life insurance policy in force if you become disabled, it can be difficult to qualify for this provision due to its strict definition of a disability. 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 a whole life policy you can 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 may be able to use the accumulated value to pay your life insurance premiums for a short period.

If you find yourself in a difficult financial situation, a cash value policy or waiver of premium rider are two potential safeguards against a policy lapse. But if neither of those options are available to you, be mindful of other health or lifestyle changes that might lead to higher premiums when you eventually reinstate your coverage.

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, but an EFT is a reliable, technology-friendly way to ensure you keep up with your insurance payments if you don’t want to use a personal or cashier’s check. As always, speak with your life insurance agent or consult your policy to confirm the payment methods accepted by your insurer for different kinds of transactions.

Insurance Expert

Nupur Gambhir

Insurance Expert

Nupur Gambhir is an insurance editor at Policygenius in New York City. Previously, she has worked in marketing and business development for travel and tech. She has a B.A. in Economics from Ohio State University.

Insurance Expert

Amanda Shih

Insurance Expert

Amanda Shih is an insurance editor at Policygenius in New York City. Previously, she worked in nonfiction book publishing and freelance content marketing. Amanda has a B.A. in literature and communication from New York University.

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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