EFT And Your Insurance Policies – There Are Many Benefits For You!

I was listening to the radio this morning and heard the news that very soon, the Social Security Administration will no longer pay benefits by check.  Right now, 93% of payments now are handled by Electronic Funds Transfer, or EFT voluntarily but now the federal government wants to wean that last 7% off of paper checks.   I have seen a similar trend in the insurance industry with less and less people paying their monthly insurance bills by check and opting for EFT payments instead.  And there are greater benefits to you of signing up for EFT payments than you might initially think.

Let’s begin with benefits that your insurance company may offer you if they don’t have to send out a paper bill and then process your paper check each month.  With your billing process set up on email and EFT, they will save money.  Going back to my original example with social security checks, the federal government says they can save over $100 million per year by converting all social security recipients to a direct deposit system.  Those savings are realized by insurance companies as well.  And some of them will share these savings with you.   For instance, Auto Owners Insurance will apply a $5 credit to your policy if you sign up for paperless processing with them.   And nearly every insurance company will waive the monthly installment fee on your policy if you sign up for EFT.  With some of them charging as much as $5 per installment per policy, this can add up in your favor pretty quickly.

Here’s a big advantage that policyholders who choose EFT billing from insurance companies gain: cancellation protection.  Imagine if you are out of town when your monthly bill comes in or if your monthly invoice just gets lost in the mail and you fail to pay it.  In the worst case scenario, you might have an uncovered loss that could destroy you financially.  But on the other end of the spectrum, you might still have to pay fees to reinstate your policy or you might owe fines to your license tag agency for a lapse in coverage on your auto insurance.   With EFT, you don’t risk a cancellation of your policy for nonpayment of premium, unless of course you don’t keep enough money in your account to cover the EFT payment withdrawal.

One of the most common objections that I hear from customers who are considering EFT for their insurance policies is that they don’t trust their insurance company with access to their bank account.   Or that they will end up with bounced checks because of an EFT charge they weren’t prepared for.   While I understand where this is coming from, I think these fears are mostly without merit.  EFT charge errors are extremely rare and in our experience, insurance companies are quick to correct their errors and pay any bank charges that they may have caused.  The fact is that you are going to have to pay the insurance payment one way or another so you will need to have the money in your bank account either way at some point.  But EFT provides you with one additional benefit to help prevent the overdraft problem.  They will let you choose which day of the month the money will be withdrawn.  So, if you get paid on the 1^st and the 15^th of the month for instance, you might want to choose the 19^th as the withdrawal date so that you are confident that you have money in your account each month to cover the EFT withdrawal.

One slightly different version of the EFT idea that I like even better is the automatic credit card charge for your insurance premiums.  There are two distinct advantages with using your credit card.  First of all, you won’t need to worry about keeping enough money in your checking account to cover the charge as you will be able to just pay it off when the credit card payment is due.  Secondly, if you have air miles or some other perks program on your credit card, you can now apply your insurance expenses to those perks and increase the benefits for yourself.

At Clinard Insurance Group, in Winston Salem, NC, we insure thousands of families all across North Carolina with their home insurance, auto insurance, life insurance and even their business insurance.  We would love to help you and your family find the best protection at the lowest possible rates.  Please give us a call, toll free, at 877-687-7557.