How To Pay For Your Term Life Insurance Policy [2024]

Can you reduce the coverage amount on your term life insurance policy?

Not sure how to pay for your term life insurance policy? If you have purchased a policy for any of the types of term life insurance, it is important to keep up with payments in order to avoid the insurance company canceling your coverage.

Most companies will offer multiple types of payment methods, and you can choose any premium payment mode you wish, from automatic payments to online payments.

Continue reading to learn more about the different ways you can pay for your term life insurance premiums every month. 

How to Pay for Your Term Life Insurance Policy

In general, the majority of insurance companies will accept automatic payments, online payments, mail-in payments, and phone payments. 

Every insurance company will have its own approved payment methods. So if an insurer doesn’t offer your preferred premium payment mode, start comparing quotes from companies that do.

Don’t have a term life insurance policy yet? Learn how to buy term life insurance in our comprehensive guide.

Automatic Payments

One of the most common methods of paying is through automatic payments, which help ensure you won’t accidentally miss a payment. Most insurance companies prefer this method, and will sometimes offer a small discount for anyone who signs up for automatic payments. 

Automatic payments can usually be linked to your credit or debit card, and will automatically be withdrawn from your account. It can be useful to choose this method of payment if you are forgetful about making payments.

Online Payments

If you don’t set up automatic payments, there are still various options to make payments each month. One popular method is paying online through your life insurance account. 

Generally, there will always be a quick payment option with your account online. With most companies, it is fairly simple. You simply sign into your account, search for information on bills or payments, and then follow the directions to make your online monthly payment. 

Mail-In Payments

Some companies will allow customers to mail in their payments through check. Make sure you check that this is an option before mailing your payment to your life insurance company. 

This is one of the less desirable payment options, as mail is slower and there can always be issues with lost mail or processing delays. 

Phone Payments

Most life insurance companies will have a phone number specifically for paying bills. You can call and will either speak to a representative or go through an automated payment system. 

If you have to wait to speak to someone in person, bear in mind that this payment method could take longer than the other payment options. 

Read more: Can you reduce the coverage amount on your term life insurance policy?

What to Do When You Can’t Pay for Your Term Life Insurance Policy

In some cases, you may find yourself struggling to make payments on your term life insurance policy. If your term life insurance policy has expired and you renew it, you’ll find that your premiums are higher than before. 

This is because term life insurance rates are meant to stay the same for the duration of the policy. When you purchase another policy after yours expires, the life insurance company can increase the rates.

If you find yourself struggling to make payments, first talk to your insurance company. You may be able to switch to a cheaper policy that better fits your financial needs. In addition, while the majority of term policies don’t have cash values, a cash-value term life insurance policy can temporarily make payments from the cash value portion of your policy.  

If you can’t find a way to reduce your rates at your current life insurance company, then it may be worth it to shop around for term life insurance quotes and find a new life insurance company.

Make sure you review a life insurance company’s financial ratings and customer reviews before signing up. Even if a company’s rates are cheaper than the rest, you don’t want to end up with an insurance provider that is close to going bankrupt or has terrible customer service. 

What happens to my term life insurance policy if I don’t pay?

If you don’t make payments within the grace period that life insurance companies grant, your policy will be void. This grace period is usually a 30-day-period. 

It’s important to pay before the end of the grace period. Otherwise, your policy will be canceled. Your insurance company may then refuse to sell you another term life insurance policy once you are able to afford a policy again. 

So if you miss a payment and are saving up to make up for missed payments, make sure you check the insurance company’s grace period to ensure your policy isn’t permanently canceled. (Read our “What happens if I don’t pay my life insurance premium?” for more information)

Case Studies: Paying for Your Term Life Insurance Policy

Case Study 1: Automatic Payments for Convenience

Sarah, a 35-year-old policyholder, opts for automatic payments to ensure she never misses a premium payment. By linking her credit card to her life insurance account, the premium amount is automatically withdrawn each month.

Sarah appreciates the convenience and peace of mind that comes with automatic payments, knowing that her coverage will remain in force without the need for manual payments.

Case Study 2: Online Payments for Flexibility

John, a 42-year-old individual, prefers to make his premium payments online. He accesses his life insurance account through the insurer’s website and uses the quick payment option to easily submit his monthly payment. Online payments give John the flexibility to make payments from anywhere at any time, making it a convenient option for his busy lifestyle.

Case Study 3: Phone Payments for Personal Assistance

Lisa, a 50-year-old policyholder, prefers to make her premium payments over the phone. She calls the dedicated phone number provided by her life insurance company and speaks to a representative who guides her through the payment process.

Lisa appreciates the personal assistance and likes having the opportunity to ask questions or clarify any concerns she may have during the payment transaction.

The Final Word on Term Life Insurance Payments

All life insurance companies have more than one payment method that you can choose from. Automatic payments are usually the best option because you don’t need to worry about remembering to make your monthly payments and you often receive a small discount. 

Now that you know how to pay for your term life insurance policy, if you are looking for a new life insurance company to purchase a term life insurance policy from, the best option is to shop around for quotes. Use our free quote comparison tool to find the best term life insurance rates from life insurance companies in your area.