Senior Life Payment Options
Before an individual is ready to purchase a senior life insurance policy, they’ve most likely done a lot of research. They’ve probably spoken with multiple agents, compared a lot of different companies, and received quotes on various plans.
Popular question clients ask before purchasing a policy is, “What are my payment options?”
When it comes to senior life insurance policies, there are traditionally two payment options – physically writing a check or automatic payment option.
Although it is becoming less common, most insurance companies will still allow an individual to write a check in order to pay for the monthly premiums. However, many companies now require individuals paying by check to pay quarterly, semi-annually, or annually. They no longer allow checks to be mailed in monthly.
Some people still prefer the check payment method. We often caution clients about paying by check. More policies seem to be canceled when this payment method is chosen.
We believe that there are several reasons for these cancellations. One reason is simply that the insured forgot to make the payment. When a monthly bill is not received, the client does not form a habit of writing the premium check.
Another reason is due to financial hardship. Financial hardship will affect the check payment method more than others. If the hardship happens in the same month as the payment is due, it can be difficult for the insured to make the payment. Also, a larger sum of money is required at one time because the payments are not spread out over 12 months.
The second payment option available is referred to as the automatic payment option. This is pretty self-explanatory. The insured allows the insurance company to draft the monthly premium out of a checking or savings account. Though some consumers are uncomfortable with this, it’s quickly becoming the preferred method for all insurance companies.
Research has shown that policies with payments made on an automatic basis out of a checking or savings account are more likely to stay in force. We believe it’s because this option best eliminates human error. Since the monthly payments are automatic, the insured is less likely to forget the payment and more likely to be able to afford the payment even during a financial hardship. Also drafting from a checking or savings account is more popular than drafting from a credit card because all credit cards expire at some point. If the cardholder does not re-initiate the auto draft on the new credit card, the policy will cancel without their knowledge.
As you can see, there are two payment options when it comes to purchasing senior life coverage. Within our agency, we strongly recommend that clients utilize the automatic payment option from a checking or savings account. With this option in place, the policy is less likely to cancel due to lack of payment.
If you have any questions regarding the payment options for a senior life plan or burial insurance plan, you can speak to one of our licensed agents. We are licensed throughout the country and would be glad to answer any questions you may have.