Life Insurance Blog

Although most life insurance premiums tend to be charged on a monthly basis, due to the schedule’s affordability, it’s also possible to pay them less frequently and in advance. This method can be cheaper but often isn’t practical.
Life insurance premiums are usually charged monthly because this is the most convenient way for most buyers to cover the cost. But this schedule can be inconvenient for the life insurance providers for a number of reasons. It makes the payments harder to administer, due to the greater number of payments and the increased need to chase those payments. It adds an interest cost for both parties, whereas if the payments were made in advance they would earn some interest for the life insurance company. Policies with monthly premiums are also more likely to be cancelled during the term, if the buyers finds themselves unable to afford the premiums, or simply forget.

For these reasons, some life insurance providers, particularly specialist or cheap providers, may not offer a monthly payment option at all.

Therefore life insurance providers tend to prefer less frequent payments that are made in advance, and in return they are often prepared to offer discounts for such purchasers. Payments can generally be arranged quarterly, annually, or as lump sum premiums.

These less frequent premiums are paid in advance rather than in arrears. This is actually the case with monthly life insurance premiums, as well, although as it’s done on a continuous basis it’s rarely noticed. Although it’s sometimes easier to forget a quarterly payment than a monthly one, at least the life insurance policy holder should have plenty of advance notice when the premium is due.

Not all life insurance providers, particularly the large ones, widely advertise their quarterly or annual payment options. When working with a life insurance broker, it’s also a good idea to inform him or her of one’s willingness to pay on a non-monthly schedule, as the monthly payment option is usually assumed.