Wheeling, IL (PressExposure) April 30, 2010 -- AccuQuote, a leader in providing term life insurance quotes to people across the United States, suggests that consumers can save money by paying their life insurance premiums annually versus monthly. The multi-carrier life insurance brokerage firm reveals that paying premiums on a monthly basis can cost consumers as much as a 29.7 annual percentage rate (APR).
Most insurance companies, whether they offer auto, homeowners or life insurance give consumers the option of paying premiums monthly, quarterly, semi-annually or annually. Consumers who pay any other way than annually are usually charged what can be a significant financing fee.
"In today's economic climate, almost everyone is looking for ways to save, especially on financial products that shouldn't be downgraded, such as your life insurance coverage," says Byron Udell, founder and CEO of AccuQuote. "The good news is that you can save a fortune and keep the same amount of coverage by paying your premiums annually versus monthly."
Financing fees may seem like a small charge for convenience and flexibility, however, the numbers prove how much consumers can actually save by paying insurance premiums annually. For example, a 30-year-old male can pay either a $500 annual premium for a $500,000, 30-year term life insurance policy or make 12 monthly payments of $45 each. Those payments add up to $540; $40 more than the actual annual cost of having life insurance protection with an APR of 17.2.
While life insurance companies typically do not disclose the effective APR, consumers can use AccuQuote's APR calculator to determine the total dollar amount and provide an approximate APR for any additional charge consumers may incur by paying premiums in installments. By simply entering the annual premium, payment method and payment amount, consumers will have the information they need to intelligently determine whether the additional cost of paying fractionally (monthly, quarterly or semiannually) makes sense financially.
"If you have a lump sum of money available to pay your life insurance premiums annually, it could save you thousands of dollars in interest over the life of your policy," says Udell. "However, life insurance companies understand that not everybody who needs life insurance can afford annual payments, which is why alternative payment options are available. In the end, having life insurance protection is one of the most important steps you can make toward protecting your family's future, so choose the payment method that fits within your overall budget."