A Case for Monthly Term Life Insurance Payments Via Electronic Bank Drafts
When you are looking to purchase a term life insurance policy many people want to know what payment options are available. You could pay monthly through what is known as electronic bank draft. This is where your payment is sent electronically to the life insurance carrier on a certain day of the month. Some life insurance carriers allow you to choose the day of the month where others will base it on the policy issue date. The other payment methods available are quarterly, which is every three months, semi-annual, every 6 months or annual, paying the whole year at once. For these three payment methods, the insurance carrier sends you a bill and you need to write a check and mail it back to them. In some cases, annual payments may be able to be paid with a credit card. Always check with the life insurance carrier you are applying with to see what their policy is regarding credit card payments.
When you choose to have payments other than electronic monthly bank draft, you have to remember to write the check out and mail it back. What if you lose the bill and forget about it? Or you forget to mail the check back, thinking you did. I had to help a customer in this exact situation with their term life insurance policy.
What had happened with my customer is that they had decided to pay on a semi-annual basis (which, again, is 2 times a year). Shortly after they had made one of their payments, they ended up moving. Keep in mind the next invoice would not show up for another 4 months. My customer forgot to update the insurance carrier with their new address. As you can imagine in the hustle and bustle of moving and everything that comes with that, anyone is bound to forget things, as it’s human and it can certainly happen. The insurance carrier was not able to reach the customer. As a result, the insurance policy ended up being cancelled due to non-payment. Months later the client realized they had not received a bill and called to inquire. They were shocked they had forgotten and could not believe they were not protected with life insurance when they thought they were. I was able to help the customer, but, in the end, they did have to re-apply and go through the entire application process again, in order to be approved for a new policy.
So the moral of the story, in my opinion, is that monthly electronic bank draft payments are the easiest way to ensure your term life insurance payments are made on time. You also won’t have to worry about writing a check and mailing the bill or perhaps forgetting about it and/or losing it. Fortunately, nothing happened to my customer during the period of time they thought they were covered with term life insurance. What if the person passed away during this period of time? What would the family have done then?
I’ll conclude with the other key point of this story and that is to make sure you update your address with your life insurance carriers if you move. When you move, you update your credit cards, banks, mortgage company and other important areas of your life. Remember, your term life insurance is just as important as these other areas of your life.
About the author: Dan Cody has been in the life insurance business for over 7 years. He loves playing a variety of instruments including the guitar, bass, drums, and piano. He also supports cancer research foundations and volunteers at local pet shelters. Dan enjoys helping customers understand life insurance, so they can find a solid policy that fits their needs. You can reach Dan at 1-800-651-1953 or DCody@Pivot.com.