Everybody has felt the pinch after the 2008 credit crunch, which followed a recession, due to high unemployment, low growth and inflation.
For many households on low and fixed incomes, having to pay high recurring fees annually has had a devastating effect. Insurance premiums are often billed in one lump sum.
Many people have been under-insuring and cancelling coverages to save money. This has resulted in an increase in uninsured motorists on the roads, as well as homes and properties that are not adequately covered. Small businesses have also found cashflow a major issue, making it difficult to pay for the years’ worth of insurance in advance.
Everyone wants to save money on insurance. Spreading the cost of cover is one way to make more.
Many business and personal insurance companies offer more flexible monthly premium payment options.
Insurance is by nature, a contract must be in force before it can be covered.
No credit is available with Insurance policies. To be effective, the money must be received prior to the event.
Monthly payment plans work as they allow the insured cover themselves on a temporary basis. Flexible payment plans allow the insured to keep the majority of their premiums and earn interest on any unpaid amounts. It is also much easier to cancel the policy.
Because it is costly, many insurance companies don’t like flexible payment plans. If a policy holder pays all premiums ‘upfront’, the money along with any other premiums is put into investment funds which earn interest for their insurance company.
Many people assume that insurance companies make a profit from the difference between claims paid out and premiums collected. This is the largest source of income for an insurance company, as it earns money on money.
In order to cover administration costs, payment plans come with a steep price.
When comparing rates for coverage and premiums, it is important to consider hidden costs. This can lead to what may appear to be a cheaper option becoming a more expensive proposition over time.
Finding Payment Plan Suppliers
How can you tell if a company offers flexible payments?
Before you get a quote, it is important to confirm that the insurance company offers payment plans.
Ask early in the conversation if such plans are available if you call a broker or direct insurer.
Look for Direct Debit companies that display the twin D’s overlapping symbol when you use the Internet. Direct debit is the method by which insurance companies collect monthly payments. This indicates that a website offers such services.
Search engines can be used to find the right type of insurance. You can also add keywords such as “payment plan” or “monthly payments” to your search terms.
You should not assume that every company quoting you will offer payment plans. However, most large companies will permit you to compare coverage which often provides this information.
Be aware that even if you’re happy with a policy and have an insurance company that offers flexible payment options, you should still read the fine print. Numerous people and companies have had their insurance cancelled due to missed direct debit payments or bank failures.
Look around for flexible plans. But don’t let the price convince you to buy coverage that is not right for your needs.
