Insurance bills are no one’s favorite mail. And paying those bills is a chore no one relishes. Most people these days opt for a monthly bill option on their insurance policies; from homeowners insurance and auto insurance to the policies covering their business insurance needs. And while it helps the cash flow to pay monthly there are risks and costs associated with this choice. For instance, in NC, every insurance company can charge up to $3 per installment on each monthly bill. And believe me, almost every insurance company takes advantage of this and charges the full $3 on each installment. If you have several policies that are billed separately on 12 monthly bills, this can add up pretty quickly. If you measure what that comes out to on an interest rate basis, you will quickly decide that this fee is highway robbery.
But the more insidious problem with monthly bills that few consider is the risk of missing one. What if you are out of town and miss a due date, or your mail gets lost? If you don’t pay an insurance bill on time your policy could be cancelled and leave you without protection. Imagine experiencing the worst loss of your life right after your policy cancelled? Think how you would feel if you had carefully bought insurance for years and years and then the one time you missed a payment your house burned? That would be tough to handle, both financially and emotionally.
The EFT payment option, which is available for most insurance policies is a great solution to all of these costs and risks. EFT stands for electronic funds transfer. This is an agreement you have with your insurance company, allowing them automatically draft your checking or savings account each month for the monthly amount due. Insurance companies love EFT because it saves them money on printing, mailing and collecting the monthly bills. As a result, almost all of them will waive the $3.00 per installment service charge if you sign up for EFT with them. And this option has other benefits for you. With EFT you can rest easy knowing that you don’t have to worry about your insurance being cancelled because a bill was lost or mislaid. Just keep an adequate balance in your account to cover the monthly bill, it will be paid whether you are at home or off on a Bahamas vacation. Not only that, but you will have saved yourself the trouble of keeping up with another monthly bill, writing the check and having to get it in the mail on time.
EFT programs also usually offer you the option of picking the day of the month on which the money will be drafted from your account. So, for instance if your paycheck is always deposited on the 1st of the month, then you could choose the 4th or the 5th of each month as your draft date. You pick what works best for you. Set it and forget it. Occasionally people tell me that they don’t want an insurance company get their hands on their bank information because they just don’t trust them to play fair. In the 15+ years that we have been working with insurance companies and our clients with EFT programs I have never experienced a situation where someone was ripped off by the insurance company because of this bank account access. This fear has just not proven to be a realistic one.
Another way to handle the month to month payment risks is to have your insurance company charge your credit card monthly. This is the way I handle my insurance payments because I like to pick up the credit card rewards on that money that I will be paying anyway. When you choose this option, the insurance company will simply charge your credit card each month for your monthly bill amount due.
At Clinard Insurance Group, located here in beautiful Winston Salem, NC, we want all insurance consumers to be informed purchasers. We work hard to help educate the general public about their insurance options and choices. If we can help you with your auto insurance, homeowners insurance, life insurance or even your business insurance, please call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.
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