Sunday, August 17, 2008

Paying Insurance Premiums On Time

I have a few insurance policies through Allstate Insurance Company. The due dates are within a few days of each other. Unfortunately this is at a time of the month when my cash flow is limited, thus I have a hard time making these premium payments on time.

Last month I missed the payment for the Renters Insurance, which then led to a generated letter informing me my policy would be deleted if not paid by a certain date. By this time I had to make two payments and was notified that my Earthquake Insurance would be cancelled as well. This is because the Renters Insurance is needed to get the Earthquake Insurance.

With my latest Auto Insurance bill it states that it will be cancelled if not paid within one day of the due date. At the top of the insurance bill it lists the date you should mail payment to allow for mail and processing.

A few months ago I opted to call in my payments and use a check with their automated system. The other options are to use your credit or debit card, but I did not feel comfortable with that option. This is due to a radio program I listened to recently that stated the practice of companies blocking a large portion of your funds for several days, this happening to debit cards. The examples were paying for gas at certain stations. I know that some also charge 40 cents to use your own debit card - so I avoid those stations and try to pay cash for gas.

The steps with the automated system are cumbersome, but I am able to record the check number and amount with reference number on my bill and store it in my insurance file. I have not figured out a way to pay more than one bill through the same phone call, so I must hang up and place another telephone call for each bill that I am paying.

The tape recorded message does mention it could take 24-48 hours to post to your account. I check online at my bank the following day and it is already there. I am saving on postage and a trip to the post office. At this time of year any trip to the post office requires waiting in line inside or to obtain a parking spot. Recent news mentioned another hike of two cents for postage stamps, although I did not catch when this actually starts.

I did not get mail on a recent Saturday and had to call information to get the number to the post office. This led to a general toll-free number for the main postal annex. I had to explain the problem of not receiving mail and wanting confirmation it would arrive that Monday. The clerk gave me the local number where the person on the phone did not believe me when I mentioned we did not get mail on Saturday. He said the delivery people did not come back until 7:30 that night. He finally did confirm that my street did not get mail that Saturday and we would get two deliveries that day, which did occur.

Therefore, I really do not want my insurance payments sent through the mail system at this holiday time. When you choose to make monthly payments of your insurance premiums you also get the added installment fee. My Auto Insurance charges me $3.50 each month. If I had the spare cash to make an annual premium those fees would be waived, saving time and money on doing this once a year.

When I inquired for Life Insurance I was told you cannot make payments on an annual basis, but it could be quarterly. I do plan on paying off my policies when I get my Income Tax Refund. Luckily there is no fee to pay the premiums via the phone system. There is also the option to have payments taken directly out of a checking or savings account. With some companies and types of Insurance you can do this with a credit card as well.

Many years ago I had Life Insurance through John Hancock Life Insurance Company and was able to have the premiums deducted monthly from a credit card. Then the card had no credit left and I had to change the deduction to my checking account until I could no longer keep up with the payments and overdrafts so had to cancel the Insurance.

Sometimes a family has to choose between making an insurance payment and putting food on the table. It is really hard when you have no credit line for emergency purposes and have to make the choice on losing the Insurance coverage or not having enough gas in your vehicle.

I have heard that with some Insurance Companies they will waive the installment fee if you utilize their easy pay plans through automatic deduction. I do not feel comfortable with these though because they never take the money out the same day or you may forget about it one month.

There is also the option of making a payment at the agent's office for certain Insurance Companies or at their website. The information on the back of my bill for Auto Insurance mentions that the payment and schedule in Option 2 is based on payment history. If you have received two or more cancellation notices in the past twelve months and were enrolled in their Easy pay Plan, which is through savings or checking account, you will be removed from the plan and need to make payments at agent's office, over the phone or through the mail. It does not indicate whether you can utilize the website for payments. Luckily I never received a cancellation notice on my Auto Insurance policy, and only one on my Renters Insurance and then for the Earthquake policy.

It is now common practice among Insurance Companies to not renew policies of those clients who continually pay their premiums late. They check the credit and payment history before issuing the policy. For some, Insurance Companies even check your credit report and may not offer a policy. I recently learned that having overdue books at the library could hurt your credit history.

Whenever you have the means it would be wise to pay your Insurance premiums annually to avoid the installment fees. I am hoping to do an annual budget once an Income Tax Refund is received to avoid living on a monthly budget that leaves no room for emergencies.

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