How am I Billed for Permanent Life Insurance?

Posted in Life Insurance , Permanent Insurance

September 22nd, 2009

Permanent life insurance is kind of like the superhero of life insurance options. By day a permanent life insurance policy is a mild-mannered plan that will provide death benefits to beneficiaries upon the passing of the policyholder. By night, permanent life insurance doubles as an investment strategy allowing the policy to build up a cash-value that the policyholder can take advantage of while they are still living. The billing portion for permanent life insurance is also multifaceted as based on the preference of the account holder, the premiums can be paidannually, semi-annually, quarterly or monthly.

Billing Choices

Your bottom line cost may be affected by the way you choose to be billed for permanent life insurance. Insurance companies typically build in a financial cushion to handle the costs of processing the billing. This cushion is called a “factor,” and the amounts for paying an annual life insurance bill will be less than opting to have your insurance premiums billed monthly. The greater the quantity of premiums, the more you will be paying in factors that are added to mitigate the costs of billing administration that the insurance company may incur.

Selecting a Billing Cycle

If you are in the process of selecting a permanent life insurance policy and are trying to decide on the billing cycle you want to apply to your permanent life insurance policy, it is important to analyze your financial responsibilities.Some people may think the additional fees required in monthly billing for permanent life insurance may be worth the cost as they do not need to pay off one lump sum and can keep their cash flow rolling smoothly. Others may opt for a quarterly permanent life insurance billing system as they may get large dividends paid at the same time, and may want to just roll over that amount directly into their next investment strategy.

The choice ofannual, semi-annual, quarterly or monthly billing for permanent life insurance is up to the policyholder. Laying out your complete annual budget of income versus expenses on a spreadsheet may help highlight how you want to pay your permanent life insurance premiums.