Have you ever wondered if you can pay for life insurance with a credit card? It might seem like a convenient option, but many insurance companies don’t allow it. This can be surprising, especially if you’re used to using your credit card for other bills. Let’s explore Can’t pay with life insurance through a credit card why some life insurance providers don’t accept credit card payments and what alternatives you can consider.
What to do Can’t pay with life insurance through a credit card?
When it comes to paying for life insurance, you might be surprised to find that in many companies you Can’t pay with life insurance through a credit card. Why is that? One main reason is that insurance companies want to avoid the potential risks and fees associated with credit card transactions. They often prefer direct bank transfers or checks, which can be more straightforward for them to process.
You might be wondering how this affects you. If you rely on your credit card for convenience or rewards, it can be frustrating. However, there are still ways to manage your payments easily. Many insurers offer options like automatic bank drafts or online payment portals that let you set up recurring payments.
So, while it may seem inconvenient, understanding your payment options can help you stay on top of your life insurance without a hitch. Have you talked to your insurance provider about what payment methods they accept?
Do life insurance companies accept credit cards?
You might prefer the ease of paying with a credit card, but most insurers don’t allow this method of payment after your first premium. There isn’t just one reason that life insurance companies don’t accept credit cards, though high fees and state regulations are the most commonly cited.
Companies that do accept credit cards may not accept them in every state and may add a processing fee to every payment. If you pay premiums monthly, those fees can add up and outweigh the convenience of paying by card.
Why don’t life insurance companies accept credit card payments?
It varies from life insurance company to life insurance company on whether or not you can pay your premiums with a credit card. There isn’t just one reason that life insurance companies don’t accept credit cards, though high fees and state regulations are the most commonly cited.
Companies that do accept credit cards may not accept them in every state and may add a processing fee to every payment. If your insurance companies allow credit card payments, they may add a processing fee. You’ll want to make sure you understand all of your insurance payment options when you first purchase your life insurance policy.
What if you can’t pay your life insurance premiums?
If you’re unable to pay your life insurance premiums due to job loss, disability, or some other major change in your finances, most policies include a payment grace period of 30 to 31 days after your payment due date.
Once that grace period ends, however, your policy will lapse due to nonpayment. To reinstate your coverage, you may be required to go through underwriting again and your premiums may increase if your health or age has changed since you first applied for coverage.
Why Insurers Do Not Accept Credit Cards for Premium Payments?
Life insurance helps protect your family from potentially devastating financial losses that could result if you die unexpectedly. In exchange for premiums, the insurer promises to pay a death benefit to your family when you pass away. However, your family receives the insurance proceeds only if your policy was active at the time of death.
A single missed payment may cause your policy to lapse. If you pass away after your policy has lapsed, the insurer is under no obligation to pay the death benefit.
When a credit card is selected as the payment method, the chances of missing a premium payment are high. If your credit card expires before the premium payment is due or if you max out the credit limit, the insurer will not be able to collect the premium, which may eventually lead to a policy lapse. This is the reason why most insurance companies in Canada do not accept credit cards.
Why Would I Want to Pay My Insurance with a Credit Card?
Paying your insurance premiums with a credit card can offer several advantages:
- Convenience:
It allows for easy and automated payments, ensuring you never miss a due date.
- Rewards and Cashback:
If your credit card offers rewards points, cashback, or other perks, paying your insurance premiums can help you accumulate those benefits.
- Emergency Payment Option:
When you’re short on cash, using a credit card provides a temporary solution, allowing you to spread out the payment over time.
- Improved Credit Score:
By consistently paying off your credit card on time after using it for insurance payments, you can improve your credit score over time.
- Payment Flexibility:
A credit card gives you more flexibility to manage your finances, especially if you have unexpected expenses or need to delay a large payment.
However, it’s important to note that not all insurers accept credit card payments, and you should also consider potential fees and interest if the balance isn’t paid off in full each month.
When do life insurance companies accept credit cards?
The chart below reflects how different insurers treat credit card use for term life insurance payments.
| Company | Initial payment | Recurring payments | Temporary coverage |
| Corebridge Financial | Yes* | No | No |
| Legal & General America | Yes* | No | No |
| Brighthouse | No | No | No |
| Lincoln Financial | Yes* | No | No |
| Mutual of Omaha | No | No | No |
| Pacific Life | Yes* | No | No |
| Protective | Yes* | No | No |
| Prudential | No | No | No |
| Symetra | No | No | No |
| Transamerica | Yes* | Yes† | No |
Payment alternatives for life insurance policies:
Depending on the insurer, you may have a few payment options. The key is choosing what better suits your budget. In terms of costs, the less frequent payment options tend to be the most cost-effective. Needing to cover more payments is generally more expensive overall.
What are the different modes of premium payment in life insurance?
Annual premium payment
An annual life insurance premium payment means you cover the entire premium upfront once a year. Typically, this is the most cost-effective payment mode, because the insurer may offer some discounts on administrative fees for a lump sum yearly payment. This can save you money; however, you’ll need to plan to ensure you’ll have the funds to cover the entire premium payment for the year at one time.
Semi-annual premium payment
You’ll pay a semi-annual premium payment twice a year. The premium cost for this payment mode will be a bit higher compared to an annual payment but less than monthly payment options.
This option may offer some flexibility for your budget, still potentially saving you some money but allowing for smaller upfront payments twice a year.
Quarterly premium payment
With a quarterly premium payment plan, you’ll send premium payments every three months (four times a year). This is another option that can help balance manageability and cost, as you’ll likely save some administrative and management fees on your premium but have more affordable payments.
One thing to pay attention to with less frequent payments is ensuring you’re on top of the payment schedule. With quarterly payments, you may need to pay extra attention to planning and your calendar for payment deadlines.
Monthly premium payment
If you choose a monthly payment plan setup, you’ll pay your premium monthly. This can help break it into smaller, more manageable chunks, which can make it easier to budget. As such, this option may offer more planning flexibility, including insurance costs in your monthly expenses.
That said, paying monthly may mean higher total premium payments over the policy’s life. If you have a whole-life policy with a cash value component, monthly payments could potentially slow the growth compared to larger lump sum payments.
Single premium payment
A single premium payment option means paying the entire cost of your life insurance policy in one lump sum payment at the start. Whether it’s an option depends on the type of policy.
The primary benefit is you won’t have to pay any additional premiums, and your policy’s cash value account may begin growing immediately. However, this could also be a significant financial outlay to pay up-front.
Best credit card for insurance payment
- Wells Fargo Active Cash® Card – Offers unlimited 2% cash back on all purchases, making it great for consistent rewards on insurance payments.
- Capital One Savor Cash Rewards Credit Card – Earns 4% cash back on entertainment and dining, plus 1% on other purchases, including insurance payments.
- Blue Cash Preferred® Card from American Express – Earns 6% cash back on groceries and 1% on insurance payments, making it a solid everyday card.
- Discover it® Cash Back – Offers rotating 5% cash back categories that may include insurance or everyday expenses.
- Citi Custom Cash® Card – Earns 5% cash back on your top spending category, which can be insurance if it’s your highest expense.
- Blue Cash Everyday® Card from American Express – Earns 3% cash back on groceries and 1% on insurance payments, with no annual fee.
How to avoid life insurance policy lapse due to payment issues
The purpose of the Grace Period clause is to avoid an unintentional lapse of a life insurance policy.
This clause allows policyholders a period after the premium due date to make the payment without any penalty or loss of coverage.
During this grace period, the insurance company will continue to provide coverage as long as the premium payment is made within the specified timeframe. If the payment is not received within the grace period, the policy may lapse and the insured may lose their coverage.
For example, if a policyholder has a monthly premium due on the 1st of each month, the grace period may be set at 30 days. This means the policyholder has until the 30th of the month to make the payment without consequences.
Conclusion
As we wrap up facts about Can’t pay with life insurance through a credit card? While it may seem inconvenient that many life insurance companies don’t allow credit card payments, there are still plenty of easy ways to keep your policy up to date. From bank transfers to automated payments, you have options to ensure your coverage stays active. Have you explored all your payment options with your provider?
FAQs
If you are unable to pay your life insurance premiums, most life insurance policies include a grace period—usually around 30 days after your payment was due—before your coverage lapses. If your life insurance policy lapses, you will lose your life insurance coverage.
Yes, if you can prepay and pay in full. Using a credit card will likely be a good idea if you can prepay your entire premium to get a discount and then pay off the balance in full. That way you can receive rewards without paying a higher cost.
Most life insurance policies cannot be suspended. However, some offer a grace period or allow you to pause payments temporarily under certain conditions. Check with your provider for specific options.
Many life insurance companies don’t accept credit cards due to processing fees and financial regulations. Instead, they prefer direct bank transfers, checks, or debit payments.
Yes, if you have a whole life or cash value policy, you may receive a surrender value when canceling. Term life policies typically do not offer payouts upon cancellation.
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