Pay-by-the-month
Pay by the month insurance has become increasingly popular in recent years, with more and more insurers offering their customers the option of spreading their insurance payments over a year rather than as a lump sum.
If you are the type of person who never has more than $50 in their bank account at one time, then paying by the month can offer you the best of both worlds: insurance coverage matched with a smoother cash flow.
Which policies can I pay by the month?
Most major insurers will offer pay by the month options on most types of insurance, from car to business insurance.
To see if you can take advantage of the option, speak to your insurer.
Does it cost more?
Some insurers will charge you a premium for paying by the month, largely due to additional overhead costs. The additional cost will, in all likelihood, be a percentage of your premium (use 15% as an average).
Some insurers, however, will offer the option as a free service to their customers.
Each insurance company is different so, if you want to find out if your insurance company has additional costs associated with pay by the month, speak to your insurer directly.
How do I choose the best option for me?
While paying by the month may seem to hold all the answers to your cash flow problems, here are some things you need to keep in mind when purchasing your policy:
- make sure you are aware, and compare, any additional costs associated with paying by the month. Don’t be afraid to shop around with different insurers. You may find identical coverage at a much reduced premium;
- understand all terms and conditions associated with the policy. If you default on a payment, you may be charged a fee. Even worse, you may lose your coverage; and
- know when your payments will be debited from your bank account and ensure there are sufficient funds to meet your obligations.