If you’re at the point where you’re asking about payment options, you have most likely completed the research phase of purchasing an insurance policy. You have sorted through multiple companies and quotes, and you’ve selected the plan that you feel best fits your needs. There can be small variations from company to company when it comes to payment options. However, there are two common payment options. Let’s take a look at these options in order to assist with your decision.
The first payment option most companies allow is to mail in a check or money order. In the past, insurance companies accepted monthly checks. However, in recent years, individuals are not allowed to send in monthly checks. With this payment option, you are now required to select quarterly, semi-annual, or annual payments. This means that you will have to write a larger check to cover the payment amount for at least three months or longer depending on the selected payment period.
This change has created some difficulty as individuals now have to set aside money each month on their own in order to be prepared for the payment when it comes due. As a result, this payment method has the highest cancellation rate for policies. If writing a check is still your preference, be prepared for this potential pitfall and focus on budgeting your money accordingly.
The second payment option is the automatic payment option, which is becoming the most popular option. This option does allow monthly payments. Most insurance companies require that the payments come out of a checking account or savings account. You will need to complete a payment form, providing account number and routing number as well as the account holder’s signature.
Not everyone is comfortable with the automatic payment option yet. However, we’ve seen that the more individuals who sign up for this option, the less cancellation of policies we have due to missed payments. One reason for this is that it eliminates or reduces the likelihood of human error for individuals who may simply forget to mail in their payments. It also creates one more safety net for missed payments as you will now receive two notifications, one from the insurance company and the other from your bank for insufficient funds.
The automatic payment option also has the least amount of change. For instance, a credit card payment can have complications if a credit card is lost, stolen, or cancelled, or if the card simply expired. If the insured forgets to set up the new card information with the insurance company, there is a good risk of policy cancellation.
Hopefully, this has provided a good overview of your payment options. It’s important to analyze your specific situation and select your payment option wisely as missed payments can lead to policy cancellations. Most insurance companies have a 30 to 60 day grace period in order to facilitate common mistakes. However, if the grace period is exhausted, the policy will be terminated and cannot be reinstated. Then the insured would be required to start the application process over from the beginning.
If you have questions about your current payment option or you would like to better understand the available burial insurance plan options, feel free to call us directly at 866-699-1884. We are licensed throughout the country and would be glad to help in any way that we can.