What to do if you can't pay your insurance premium
Your insurance premium is the payment required to procure continued insurance coverage. Depending upon the type of coverage and the company providing your coverage, payments may either be made monthly or annually.
The cost of a premium is determined by many factors. Depending upon the type of coverage you have, your age, gender, location, health conditions and driving record may influence the cost.
Whatever the cost of your premiums ends up being, you likely have enough money in the budget to meet the demand. At first. Sometimes circumstances change and unforeseen events may force you to miss a payment.
What happens if I do not pay my premium?
Missing a payment date doesn’t usually mark the end of your coverage. Most insurance companies offer a payment grace period between one to three months. So long as your payment is no later than the grace period, your coverage will continue uninterrupted.
If you fail to make a payment during the grace period, your insurance company will cease to provide you with coverage. The obvious consequence of this discontinuation is that you are now vulnerable where you were previously covered. If, for example, you do not pay your life insurance premium, your insurer will not make a payment in the event of your death.
What are other consequences?
Losing insurance coverage may have secondary consequences. Take auto insurance, for example. If coverage is discontinued, you may no longer legally drive your vehicle.
Where insurance coverage is law, failing to pay your premiums can have a more intrusive impact on your life than simply leaving you uncovered.
Missing payments can also hamper your credit score, especially if payments are missed outright, rather than just late.
What are your options after a missed payment?
In some cases, you may be able to renegotiate a deal with your insurance provider. Either by changing the type of coverage you receive or by simply reducing the rate. Of course, that’s the most ideal scenario.
Other times you may be forced to seek out a new provider, and make your choice based on affordability.
How to avoid missing premium payments
Firstly, figure out whether your budget can better accommodate annual or monthly payments. Annual payments are usually cheaper, but it can be easier to budget for monthly payments. If you anticipate that a big one-time payment will prevent you some keeping on course, perhaps stomaching the extra cost of monthly payments is the safer choice.
Secondly, and imminently obviously, though still worth mentioning, is to pay a lower premium. That means shopping around to find the provider that will offer you better rates for the same coverage.
Alternatively, you can change the type of coverage you have. Greater coverage translates to greater premiums, so if you find that you have more coverage than you need, an easy way to save money is to change the type of coverage you have.