Life Insurance and Credit Cards
If you are considering the purchase of a life insurance policy one of the choices you’ll make is how to pay for your insurance.
Actually, there are several options you may be able to choose from depending on the insurance company. Most insurers offer you several payment options to use when paying your premiums.
Yes, you can purchase life insurance using a credit card with some insurance companies.
Premium Payment Options
Upon applying for a policy and being approved for life insurance you will be asked how you wish to pay your premiums. Below are listed several common payment options:
Credit Card Companies Accepted by Life Insurers
The credit card companies that insurers accept may vary by insurer. However, many insurers that accept credit card payments use Discover, American Express, Visa and MasterCard.
Credit Card Survey for Life Insurance Industry Conducted by LOMA
A survey was conducted in late 2014 to early 2015 among LOMA member insurance companies in the U.S.
The survey found that 20% of surveyed insurers currently accept both credit and debit cards for premium payments, 16% accept credit cards only, 2.5% accept debit cards only, and 61% don’t accept either.
Other industry research shows that younger consumers, such as the Millennials, prefer to do most of their business through smartphones and similar mobile devices. This includes making payments.
And many consumers of all ages are foregoing checks and paying bills online. For these customer segments, credit and debit cards offer a convenient way to pay premiums.
In the future, some analysts say, it will be more important to offer this option, as Millennials grow in influence and increase their purchase of life insurance products.
ACH (Automatic Clearing House) and checks are the leading methods by which consumers pay their premium bills for life insurance and related products. Credit and Debit cards make up 12% of the payments, on average.
Of the insurance companies that currently don’t accept credit and or debit cards, quite a few are interested in doing so: 42% are considering accepting both credit and debit cards within the next two years, 15% are considering credit cards only, and 7% are considering debit cards only.
Source: LOMA Survey – Life Office Management Association – An educational organization that focuses on the life insurance business and develops administrative and technical courses.
Do Life Insurance Companies Accept Credit Cards?
Whether or not you can pay your life insurance premium with a credit card depends on the rules of the company through which the policy is being purchased.
Many companies allow credit card payment for premiums that are paid in a mode other than monthly (i.e. quarterly, semi-annually, or annually).
Discuss the form of payment with your life insurance agent before you purchase the policy, so that you do not end up losing your life insurance coverage policy over the inability to pay the premium in the manner required by that company.
Some insurance companies will not accept credit cards for payment of premiums. Some will.
Usually, if you pay your premiums annually, semi-annually or quarterly many providers will accept credit card payment.
Updating Your Credit Card Information
It seems the biggest issue with credit cards is that people tend to forget about updating their information as needed with the insurance companies they pay by credit card.
When your credit card expires, and is replaced with a new expiration date the previous card is no longer useable.
Sometimes people will delete a credit card account that was being used for automatic payments on their life insurance and not inform their insurance company of a replacement card.
That’s one reason life insurance companies prefer to debit your premium payments from your checking or savings account, instead of allowing credit card payments.
What Insurance Companies Accept Credit Card Payments for Life Insurance?
Many people who apply for life insurance ask if it’s possible to pay for their insurance premiums on a credit card.
Monthly Payments Using Credit Cards
Currently, there is one company that will allow you to pay monthly premiums on a credit card.
That company is Fidelity Life Insurance. They are a non-medical life insurance company and offer up to $499,000 of coverage.
Beyond Fidelity, there are no other life insurance companies who will allow you to make ongoing monthly payments on your Visa, MasterCard, American Express or Discover Card.
Initial Premium Payment Using a Credit Card
However, there are several life insurance companies will allow you to pay your initial premium payment on a credit card, but future payments must be done via ETF (electronic funds transfer) from your bank account.
Discount for Annual Premium Payments
We always encourage our clients to take advantage of this by making your initial premium payment annually by putting it on your credit card because life insurance companies give you a discount for paying annually – usually in the 4%-5% range.
You can request an instant life insurance quote comparison and see the monthly premiums along with the annual premiums.
It’s simple, take the monthly premium and multiply it by 12 and you’ll see it’s always more expensive than if you paid your life insurance premiums annually.
Rewards Points on Credit Cards
Many consumers love the fact that you can pay annually on your credit card just for the fact they can collect reward points on your credit card.
Of course, this only makes sense if you pay your card off in a reasonable amount of time so you don’t pay any interest charges.
Most life insurance agents won’t ever bring this option up because it’s not common knowledge within our industry that you can do this. However, we do this all the time and have researched the companies that accept initial credit card payments.
Insurance Companies Accepting Initial Premium Payments on Credit Cards
Here is a list of some life insurance companies that may accept credit cards for the initial payments of premiums:
NOTE: Credit Card payments for these companies may not be available in every state.
If you end up applying for life insurance with one of the carriers listed above, don’t forget about this credit card option. Especially if you’re getting rewards points on your credit card. You’ll save some money by paying your premiums annually (once per year).
If you want to make ongoing monthly, quarterly, semi-annual or annual payments by credit card – Fidelity Life is your only option right now.
Should You Use a Credit Card to Pay Your Insurance Premiums?
It’s not a simple decision, but there are a number of reasons why it would be a good idea.
For example, if you can pay off the credit card payment in full or almost in full at the end of every month, then paying your insurance payment is not a problem.
If you tend to miss payments and decide to set up automatic payments through your credit card, it’s a better idea than letting your insurance lapse because you forgot to pay the bill.
Also, if there is no other way for you to afford life insurance, then go ahead and put it on the credit card.
It’s better to incur the finance charges on your credit card than to be caught without any life insurance when your family needs it most.
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