How Do They Structure Payments For A Term Life Insurance Policy?

By: Lynn Huggins

Deciding to get a term life insurance policy always includes working out how to fit the cost into your budget. The main reason people don't get insurance isn't because they are not interested in the benefit of being insured but rather because they can't make the expense of insurance fit into their budget. They can't see affording an insurance payment along with everything else there is to spend their money on.

There are a few different payment options allowed by most insurance providers. You can elect to pay annually whereby each year the company you purchase from will send you a bill and you pay for the entire year. As with all insurance, coverage begins when you make your first payment. So you are paying up front and if you are paying annually your first year's premium is paid before the insurance goes into effect. You can pay semi-annually and the provider will send you two bills a year. Each bill is sent before the current coverage lapses with plenty of time to get the next payment in for you to have continuous coverage. You can pay quarterly in which case the provider bills you four times a year, once every three months. And the most common payment frequency is to make payments on a monthly basis. Many insurance companies require setting up a monthly automatic draft from you checking account for monthly payments.

One interesting detail about when your insurance coverage starts is that if you are eligible, sign the application and send in a check for the first payment you are covered after the medical exam. If you were to die after these steps were taken but before your insurance was approved, the insurance company would continue to process your application. Al long as you would have been approved anyway, the insurance company will honor the claim on the policy.

Article Source: http://yourfinance.co.za