- For some, making a full payment annually is a comfortable option, and some insurers will offer a discount on the policy of around 7% for doing so.
- Paying in monthly installments means your provider will not offer you a discount for paying in one fell swoop, and they’ll also tack on a small, monthly installment fee.
- Some insurance companies will allow you to pay your premium quarterly instead.
Whenever you buy a car insurance or home insurance policy – or if you purchase a bundled insurance package where you get both policies from the same provider and receive what’s known as a multiline or multi-policy discount – your provider will typically offer you the option to pay the premium annually in full or in smaller, monthly installments. Which payment option should you choose?
For some, making a full payment annually is a comfortable option, and some insurers will offer a discount on the policy of around 7% for doing so. For others, monthly payments over the course of the year are more agreeable. There is no right or wrong here; what you choose comes down to what you can afford comfortably.
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What are the benefits of paying monthly premiums?
Many Canadians opt to pay their insurance bill in monthly installments. Choosing to do so, though, means your provider will not offer you a discount for paying in one fell swoop, and they’ll also tack on a small, monthly installment fee.
So, yes, you’ll pay a little more throughout the year by opting for a monthly payment plan. But there are a few benefits to taking this route, including:
- Choosing to pay the premium in 12 monthly installments is easier on your budget.
- If you intend to switch to another insurance provider before your policy is due for renewal, it may be more convenient and simpler to make that change.
But there are potential downsides, too. For instance, if you miss a monthly payment you may get charged a late fee by your provider. Moreover, missing payments could lead to your policy lapsing, and the insurer may up your premium at renewal (your insurance history is one of the things carriers look at when determining what your premium should be).
What are the benefits of paying annual premiums?
Paying your premium once a year requires having the funds to comfortably afford it (you don’t want to leave yourself short of cash or have to make budget compromises in other areas of your life). But paying annually does have its benefits, including:
- Your insurer may offer you a discount of around 7% on the total cost, therefore, you’ll save funds on the total cost of your policy.
- You won’t have to pay any administration fees associated with paying in monthly installments.
- You don’t need to worry about making monthly payments on time to avoid being charged a late fee.
However, paying annually also means if you decide at some point during the year you want to cancel your existing policy and switch to another insurer, you may be charged a cancellation fee.
Are there other insurance payment options?
, some insurance companies will allow you to pay your premium quarterly instead (four payments every three months). Breaking the premium payments up into four quarterly installments might be more agreeable to some. There may still be a small administration fee involved, though, so talk to your broker or insurer and find out if there is and how much.
Deciding which insurance payment option to go with depends on your finances and level of comfort first and foremost. When mulling it over, do a quick comparison of car insurance policies and premiums, that way you’ll be able to find the best price for the coverage you need.