How to Pay Life Insurance Premiums

Christian Worstell
In this article...
  • Life insurance premium payment options may vary among companies. Explore options for paying your premiums and learn what happens if you don’t make payments.

Paying your life insurance premiums is crucial for keeping your plan active and in good standing, and having the right payment options can reduce the risk of missed payments.

Because life insurance premium payment options vary among companies, it’s important to choose a provider that offers a payment method that's convenient for you. In this article, we’ll explore options that may be available for paying your premiums. We’ll also tackle the question of what happens if you don’t stay current with payments.

What Are Life Insurance Premium Payments?

Life insurance premiums pay for your policy. They’re determined through the underwriting process at the time of initial purchase, and are usually influenced by the type of policy you’ve purchased, the amount and duration of coverage, and your personal risk profile.

Your premium must be made regularly, according to the schedule specified in your contractual terms. Payments may be scheduled annually, biannually, quarterly or monthly. Single-premium policies, which are paid as a lump sum at the time of purchase, are also available from some companies.

Are Premium Payments Always the Same Amount?

Depending on what type of plan you choose, premium payments may vary over time, or they may remain the same for the duration of your policy. Some plans are also subject to rate hikes that reflect inflation and interest rate changes.

Level-Premium Plans

Level-premium plans promise uniform payments over the duration of a policy. The changing costs that the policy may incur over its lifetime are averaged out from the beginning, so payments stay the same even if the coverage amount increases or decreases over time.

Flexible-Premium Policies

Flexible-premium policies, also known as adjustable life insurance plans, let policyholders adjust their premium payments to suit their budgets and investment goals.

When you purchase an adjustable life insurance policy, your premiums fund two individual components of the plan: the death benefit and the investment portion (plus administrative fees). As the cash value of the investment component increases, policyholders may opt to use it toward premiums, reducing or eliminating their out-of-pocket payments.

Flexible-premium plans may also let policyholders decide how much to pay on premiums each month. These plans set a minimum and maximum payment amount, and the more money the policyholder pays to the plan, the quicker the cash value accumulates.

What Types of LIC Payments are There?

It’s important for policyholders to choose a reliable method of payment, which may be why most companies offer several payment options. Depending on your insurer, common life insurance premium payment options may include the following:

  • Check: Many insurance companies accept personal or business checks. Checks may be mailed or submitted over the phone by providing your banking information, including the routing and account numbers as well as the number of the next check in your book. Fees may be assessed if a check is returned unpaid.

  • Cashier’s check: If you don’t have a checking account or you need a guaranteed payment method to initiate a policy, a cashier’s check is an option that many insurers accept. Cashier’s checks are available at any commercial bank for a small fee.

  • Bank transfer: Bank transfers are often the preferred means of payment for both consumers and insurers. They’re typically set up online or over the phone by providing bank account information to the payee. Some banks may also let you set up transfers directly from their online portal.

    Bank transfers are usually scheduled for a specific day each month, and many companies provide upcoming payment notifications via email so you can make sure your account has enough to cover the transaction.

  • Credit card: Although many insurance companies accept credit cards for the premium down payment, many won’t permit recurring or monthly payments to be made this way. Companies that do accept credit cards for monthly premium payments may assess a small convenience fee for the service.
  • Cash: Although most companies don't accept cash payments, those that maintain local branches may make exceptions for in-person payments.

Because payment options vary by company, check with your insurer to find out your specific options.

Where Can You Pay Your Premium?

The payment method you choose may depend in part on where you pay your premium. Although many insurance companies now require customers to make automatic payments using a linked bank account, some insurers also offer the following life insurance premium payment options:

  • At a branch: If your insurance company has a local branch, they may accept in-person payments. Some insurers may permit payments in cash or using a debit card if you’re doing so in person.

  • Online portals: Most modern companies maintain online portals, which offer customers the ease of making premium payments online. Many customer portals provide options for setting up advance or recurring payments.

  • Over the phone: Many companies accept a variety of payment types over the phone. Some insurers feature automated self-serve phone systems that customers can use to submit a payment via credit card or check. Usually, customer service representatives are also available to take payments.

What Premium Payment Mode is the Most Expensive?

The mode of payment refers to how often premiums must be paid, which is typically specified in your contract. At the time of purchase, customers may be given the choice of annual, biannual, quarterly or monthly payments.

Because there are fewer administrative tasks associated with annual payments, they’re typically the least expensive option. For the same reason, monthly payments are often the most expensive payment mode.

However, for companies that require automatic monthly payments through an electronic funds transfer, monthly payments may actually be less expensive.

What Happens if You Don’t Pay Your Premiums?

If you don’t pay your premiums, your life insurance policy will lapse. If you have a permanent plan, the accrued cash value might be enough to keep the policy active for a while.

If your permanent plan doesn’t offer that option, you may receive the policy’s cash value when it lapses, minus applicable penalties. However, if a term plan lapses, your benefits are forfeited. Depending on the provider, a lapsed policy could be reinstated for a limited time.

Is There a Grace Period for Late Premium Payments?

Most companies offer policyholders a grace period that can be as long as 30 days. During this time period, you may catch up on late payments to return your policy to good standing. Depending on your contract terms, late fees may apply.

When Should I Talk to My Agent About Life Insurance Premium Payment Options?

Reaching out to your insurance agent or your insurer's customer service team can be useful in many situations. These trained industry professionals can help you resolve premium payment issues and other policy-related concerns. They can also provide guidance if your policy is at risk of lapsing due to nonpayment.

Christian Worstell
About the Author

Christian Worstell is a senior Medicare and health insurance writer with He is also a licensed health insurance agent. Christian is well-known in the insurance industry for the thousands of educational articles he’s written, helping Americans better understand their health insurance and Medicare coverage.

Christian’s work as a Medicare expert has appeared in several top-tier and trade news outlets including Forbes, MarketWatch, WebMD and Yahoo! Finance.

While at HelpAdvisor, Christian has written hundreds of articles that teach Medicare beneficiaries the best practices for navigating Medicare. His articles are read by thousands of older Americans each month. By better understanding their health care coverage, readers may hopefully learn how to limit their out-of-pocket Medicare spending and access quality medical care.

Christian’s passion for his role stems from his desire to make a difference in the senior community. He strongly believes that the more beneficiaries know about their Medicare coverage, the better their overall health and wellness is as a result.

A current resident of Raleigh, Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism. You can find Christian’s most recent articles in our blog.

If you’re a member of the media looking to connect with Christian, please don’t hesitate to email our public relations team at

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