Do I have to pay annually or monthly?

It's entirely up to the policy owner. During the application process, the policy owner is asked whether they would prefer to have their premium payments annually, monthly, or sometimes bi-weekly. We also write with certain carriers that allow the policy owner to even choose the day they want the money to come out of each month.

Monthly vs Annual Payments

Choosing a payment method can be daunting if someone puts too much thought into it, but it really comes down to the personality of the policy owner. The advantage of annual payments is that the cost actually ends up being slightly lower, as insurance carriers are no stranger to rewarding lump sum payments. Paying all of a year's premium at once can save a few bucks, and depending on the size of the policy and the premiums being charged, this can be quite substantial.

On the other hand, having a payment come once a year can be a shock to some. Not everybody is exactly sure what their finances are going to look like a year from now, or if they are going to be able to afford the lump sum when the time comes. These people are better suited for a consistent monthly payment that they can adjust for throughout the duration of the year.

Whether a policy owner decides to go with monthly or annual payments is entirely up to them, and they are given the option of both during the application process. Making this choice comes down to the financial literacy of the policy owner and how they believe they will react when a large lump sum hits their account once a year.