What’s the Best Way To Pay For Your Insurance Policy?
Most car insurance companies offer at least two ways to pay your premiums: monthly and annually. Each payment schedule carries its own perks and drawbacks, and each is better for some drivers and not-so-great for others.
Paying Monthly Auto Insurance Rates
Making monthly auto insurance payments is probably the most common way Americans pay their insurance premiums. There are several reasons for this:
- Paying month-by-month means coming up with one lower payment each month as opposed to a higher lump sum for the entire year.
- It’s just not feasible for some low-income individuals to make that high a payment all at once.
- Without a significant savings account, even middle-income families could suffer financially by shelling out that much money at once.
- Making monthly payments offers more flexibility than making annual payments. It’s easier to switch car insurance providers―and not lose any money in the process―if you’re only committed to the policy for 30 days.
However, making monthly payments isn’t the best option for every policyholder. Read on.
Paying Annual Auto Insurance Rates
The biggest financial benefit to paying annual auto insurance rates is being able to take advantage of any full payment car insurance discounts your provider offers. Some providers give discounts to customers who pay car insurance policy premiums all at once, rather than one month at a time.
Aside from those discounts, however, paying your car insurance rates all at once:
- Helps you avoid additional monthly fees, such as installment fees, which in turn helps you save more money.
- Is a great idea for seasonal workers who receive large chunks of money during certain parts of the year and want to take care of yearly bills while they still have the cash in hand, rather than worry with adding one more item to their monthly budget.
- Frees up an entire year of having to remember to make the payment, which is not only convenient but also eliminates the risk of paying late fees or having your coverage canceled.
Monthly or Annually: Choosing Your Auto Insurance Payment Method
Whether you’re currently shopping for car insurance or already have a relationship with a provider, ask yourself the following questions to determine whether paying monthly or annually is the way to go:
- Do I feel comfortable enough with this provider to stick with it for a year? Of course, nothing says you have to stay with your insurance company for the duration of the year, but it’s easier to switch companies at renewal time.
- Do I make enough money to comfortably pay my yearly insurance premiums all at once?
- Do I have a large enough savings account to pay my premiums annually and not suffer a financial setback?
- Is the money I’ll save on installment fees and the full payment car insurance discounts significant enough to spend that kind of money all at once?
- Does my driver status (e.g. high risk driver, young driver) mean my rates are higher, and if so, would paying annually cut back on some of those costs?
- Is paying monthly or annually better for my budget? Can I set aside the payment each month, or should I be safe and pay it all at once while I know I have it?
Receiving something such as a tax return gives you the opportunity to pay your insurance premium in one installment. If you have any questions to determine if it is best to pay your insurance premium monthly or annually, give Cloverleaf Insurance a call at 636-928-1373.