Can I Pay For My Insurance in Payment Installments?
When you purchase a product, do you revel in the idea that you have various payment methods available to you?
Installment plans or payment installments sound very appealing because they allow you to purchase things while paying for them gradually with your future income.
Whether you’re buying a product like a car or a house or paying for the insurance to cover them, your financial plans might include paying gradually with installments.
If you’re wondering about payment installments for your insurance premiums, we have you covered. Keep reading to learn some financial strategies and how payment installments work when paying for your insurance.
Insurance Premiums
When you get an insurance policy, it comes with a price called the insurance premium. It’s a specific sum of money you agree to pay for your coverage.
Most insurance providers offer a number of ‘modes of premium’ to fit your budget. The most common options are annually, semi-annually, quarterly, or monthly.
Mode of premium determines the frequency in which you pay and how you make payments. Will you pay with a check, cash, credit card, or other option?
How Do Modes of Premium Affect Your Payment?
If you choose a more frequent mode of payment, your individual payment is less, but cost more in total.
For example, say you choose to pay for your premium with monthly payments. You might end up paying $150/month but if you paid it in one annual payment, it may be $1250. That would mean a savings of $550 if you paid annually instead of monthly.
If you don’t have the money upfront, payment options are an excellent choice even if they do cost more in the long run. Insurance companies do it this way to offset the uncertainty they face and higher collection costs.
Opportunity Costs
When you are choosing your mode of premium, make sure you consider opportunity costs and liquidity. How much cash do you have available to make premium payments? If you don’t have much, it’s doesn’t make sense to choose the annual payment option.
If you do have enough money to cover the annual premium, you have to look at what else you could do with the extra money you’ll have if you choose monthly payments. These are opportunity costs.
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Payment Plans and Payment Installments
Paying for your insurance is not optional if you want to keep your coverage. Paying in full may get you a discount, but if that’s not possible, payment plans with payment installments are your best option to fit your budget.
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