Should you pay for Life Insurance with your Credit Card?
As far as carrying out transactions on a daily basis, we live in a ‘plastic’ age today, referring to the material that charge cards are made of, whether a debit or credit card. However, not all payments are conducive to being done through a card, and life insurance is one item that comes under this category. There are many reasons why you will not get the opportunity to pay for life insurance with your credit card.
In this article, we look at two aspects of getting credit card life insurance coverage. Firstly, we examine whether or not it is possible and if so, which are the carriers that provide this option. Next, we consider the pros and cons of the question: “Should you pay for life insurance with your credit card?”
Can I Pay for my Life Insurance with my Credit Card?
Any good insurance agent gets a fair number of queries whether or not it is possible to get credit card life insurance benefitwith credit cards. Currently, only one insurance company allows you to pay regular monthly premiums with a credit card, and that company is Fidelity Life Insurance. This company is a “no medical exam life insurance” company, and you can get credit card insurance up to $250,000. Other than Fidelity, other companies also allow you to pay for your life insurance through your credit card, but only under certain conditions.
Many companies will allow buying life insurance on a credit card to pay your first premium, but you need to pay subsequent premiumsvia electronic funds transfer from your nominated bank account or through check. If you pay annually, this first premium that you pay through your credit card can attract a discount of 4% to 5%. Here are a few companies that allow you to pay for your first premium with your credit card:
- American General
- Banner Life
- Genworth
- ING
- North American
- SBLI
- Transamerica
Overview
Historically speaking, over 80% of Americans are in debt, and the average credit card owner has debt outstanding to an average of $10,000 worth of unpaid charges per person on a regular basis. However, if a person arranges things in such a way that the total outstanding dues on their card are cleared on a monthly basis, then all is well.
So, considering your life insurance premiums as being just another commodity that you are buying with your credit card, then you don’t have to worry. Unfortunately, everyone isn’t perfect, and most people tend to fall back on their credit card payments from time to time.
Unlike other goods and services that you may pay for through your credit card, your life insurance policy needs to be in force at all times – disaster never knocks, it strikes. With this in mind, if you still want credit card insurance coverage, it is a good idea to set up an automatic payment through your credit card service which will ensure that your premiums are up-to-date and paid up at all times.
Advantages of Paying through your Credit Card
1. Rewards and Points
If you are disciplined about your monthly payments and make adequate arrangements to pay your monthly premiums through your card every month, you can avail of any rewards and points that are on offer from your credit card provider.
2. Timely Payments
If you are the kind of individual who tends to forget to pay particular bills, setting up an automatic withdrawal system through your credit card is a great idea. This way you will ensure that your premiums are paid on time whenever they are due, whether it be monthly or annually.
3. Discounts from Your Life Insurance Company
Anyone who has a good credit history and pays their dues regularly is always in favor of the goods or service providers that they are paying. Some life insurance companies take into account the credit ratings and regularity of payments from individual customers to offer discounts. Discuss with your insurance agent the details of these discounts that are being provided by insurance companies for a credit card insurance policy.
4. One less thing to take into account
You have enough to remember without needing to determine if your life insurance is up to date. Bank card payment plans offer a “set it and forget it” option that appeals to many consumers for a credit card life insurance benefit.
Still, it is also essential to keep in mind that insurers change their minds. Keep track of your insurer’s credit card policy which means you don’t get caught by a policy or fee change.
5. Flexibility in Cash Flow
Since payments from a credit card don’t reflect directly on your bank account, you will gain certain flexibility in the cash flow of your bank balance which gives you ample time to plan your finances. The only thing that you need to bear in mind is that you should ensure that you pay all your outstanding dues within the period of a single billing cycle for your credit card life insurance policy.
Cons of using your Credit Card
1. Charges and Fees
Using a credit card is a facility which comes at a premium of its own. This provision is reflected in the costs that often go unnoticed as they get cleverly buried in the different categories mentioned in your monthly credit card bill. If you are the sort of person to pay your credit card bill blindly every month, you are not likely to realize that you are being charged extra.
Sometimes specific charges by your credit card companies may seem low but only apply for a fixed time, after which they increase, and you don’t notice this, because the clause is buried deep in the fine print. So, you would do well to take a careful look at the extra charges that you may end up paying and if they are considerable, why go for it in the first place?
2. The Danger of Missed Deadlines
Deadlines can be missed for various reasons, often which are beyond our control. If you forget your payment deadline for whatever reason, your credit card company will charge you hefty interest rates. This occurrence would result in unnecessary expense which could have been otherwise avoided if you had opted for some other payment method instead of credit card insurance.
3. Hidden Costs in EMI
Opting for a monthly EMI payment on your credit card can be tempting, as the additional monthly amount may seem small. However, if you add up these small amounts to the total price that you are paying, you will be amazed at the total it comes to, and if you default on a few payments, you may well end up paying more than your actual premiums! So, don’t be misled by promises of secure EMI payments to be set up by your credit card company only to be ripped off in some other clever way by them.
4. Monthly Checking Required
Since credit cards are prime targets for fraudsters, you need to check all your transactions every month against your credit card bill to ensure that the statement reflects the purchases you made, including your credit card life insurance coverage. Make sure to contact your credit card provider if you are in doubt of a particular transaction., however small. Fraudsters can steal money in hundreds as well.
Your Best Advice on Credit Cards
To sum up, let us consider what we have discussed here:
- Currently, you can only buy credit card life insurance benefits from Fidelity Life Insurance
- You can pay the first premium through your credit card for a few select carriers, but then subsequent premiums cannot be settled through credit card.
- If you pay for your life insurance through your credit card, there are both disadvantages as well as advantages.
- If you use your credit card to pay for life insurance, you need to be financially well-disciplined, to avoid additional charges.
So, with that, the question, “should you pay for life insurance with your credit card?” is answered – yes, you can, but you need to be careful about how you go about it. It is not a commonly-accepted practice, but if you would like to learn more about it, then you can contact your insurance agent for more details.