Buying Life Insurance on a Credit Card

purchase life insurance on a credit card 2We get a fair amount of requests from our clients asking if it’s possible to pay for their life insurance on a credit card.

We get the allure too.  Who doesn’t want to rack up those credit card points for travel or cash back offers?  We certainly do. It’s a savvy financial move.

With over a decade of experience writing life insurance across the nation, this article is going to answer some of the questions about buying life insurance with a credit card.

Can you buy life insurance on a credit card?

Currently, there’s only 1 company that will allow you to pay monthly on a credit card.  It’s a term life insurance company whose prices are higher than most companies.

Beyond this life insurance company, there are no other life insurance companies who will allow you to make ongoing payments on your Visa, MasterCard, American Express or Discover card.

So why don’t life insurance companies allow you to pay on a credit card?

Lapses.

With credit cards expiring, replacement cards being mailed out, going over your credit card limits resulting in declines and credit card fraud alerts making your credit card unusable sometimes, many life insurance policies lapse causing a lot of headache for the carrier and for the insured (you).

There are costs involved from the life insurance companies point of view to always be mailing lapse letters, notifying your agent to get in contact with you and then processing the forms needed to change payment methods or the time it takes the company to re-draft the premium. This is why companies don’t take monthly payments for life insurance premiums.  It’s simply a customer service nightmare for something you’re supposed to keep for decades.

HOWEVER, many life insurance companies will allow you to pay your initial premium payment on a credit card, but future payments must be done via electronic funds transfer from your bank account.  This means you can pay your entire first year of life insurance premiums on a credit card.

Can you buy life insurance on a debit card?

For term, whole and universal life insurance, it’s considered the same as buying life insurance on a credit card.  You can pay your initial premium that way – all the way up to your first year.

For final expense life insurance, some companies will take debit cards. Final expense life insurance are small whole life insurance policies meant to cover burial expenses and any final debts. Typically these are small $10,000 life insurance policies to seniors ages 60-85.

The reason final expense companies take debit cards is because many fixed income seniors take social security or even disability payment from the government. Many of these payments are often deposited into debit accounts that the government has partnered with like Direct Express or NetSpend. So it makes sense for final expense companies to take debit cards and draft on the social security payments dates.

Life Insurance Hack Using a Credit Card

We always encourage our clients to take advantage of life insurance companies letting you make your initial premium payment annually by putting it on your credit card because life insurance companies give you a discount for paying annually – usually in the 4%-5% range.

Add to the fact that you get credit card rewards points for protecting your family with life insurance, we believe everyone should do this if it’s available with the company you’re applying with.

Don’t take our word for it, see for yourself.  Run instant life insurance quotes on our website and we’ll give you the monthly premiums along with the annual premiums side by side. When you do this, take the monthly premium and multiply it by 12 and you’ll see it’s always more expensive than if you paid annually.

Here’s a quick example:

buy life insurance on a credit card

Some companies give bigger discounts for annual pay, so if you’re going to pay annually, don’t look at the monthly premiums on the quotes you see on our website, look at the annual payments.

Many of our clients love the fact that you can pay annually on your credit card just for the fact they can collect reward points on their credit card.  Of course, this only makes sense if you pay your card off in a reasonable amount of time so you don’t pay interest charges.

Most life insurance agents won’t ever bring this option up because it’s not common knowledge within our industry that you can do this.  However, we do this all the time and have researched the companies that accept initial credit card payments.

Here are a list of some companies that accept credit cards for the initial payments:

  • American General
  • Banner Life
  • North American
  • SBLI

Please note that credit card payments for these companies aren’t available in every state.  Also, not all credit cards are taken with the companies that do accept credit cards.  Please check with us or your agent.

Also, there are more companies than these four listed above as well.  We just don’t want to give away all our intel on this to our competition.

Bottom Line

If you end up applying for life insurance with one of the carriers listed above, don’t forget about this credit card option. Especially if you’re getting rewards points on your credit card.  You’ll save some money by paying annually. We always recommend our clients do this after they’ve been approved for life insurance and are intending to pay monthly.

A lot of agents and agencies out there aren’t aware that you can pay your first life insurance premium annually, so if you’re already in the process of buying life insurance make sure you ask your agent.

If you want to make ongoing monthly, quarterly, semi-annual or annual payments by credit card – there is one company that will do it, but they are expensive and have a limit on how much life insurance you can buy. And honestly, we don’t recommend paying monthly, quarterly or semi-annually on a credit card because of the reasons we mention in this article – how often credit cards expire or get replaced being the main reason.

Again, if there are any changes, we’ll update this article.

About Jeff Root

is the owner of rootfin.com. He's an independent life insurance agent who has helped 1,000's of consumers purchase life insurance online and over the phone.

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6 Comments

Hey Jeff,
I know it’s been a while since you wrote this. Is Fidelity still the only life ins company that you know of who allows monthly CC payments?

March 28, 2017 at 2:50 am
    Jeff Root

    Yes, they are still accepting credit card payments and are the only ones I know of.

    June 21, 2017 at 10:59 pm
Charlotte

Hi Jeff,
Thank you for the helpful information you have posted. Do you happen to know why most insurance companies don’t allow/accept monthly payments? I am wondering if it is due to legislation/regulation or if it’s just basically a “standard operating procedure” within the industry. Any insight on this will be greatly appreciated!
Thanks,
Charlotte

January 11, 2018 at 7:33 pm
    Jeff Root

    Most companies allow monthly payments via EFT. Writing a check every month (what we call direct bill) is what many companies don’t allow because of the administration costs and dealing with lapses/late payments.

    February 4, 2018 at 8:13 am
Colin

AAA Life insurance allows online credit card payments for their ‘no exam’ 250k policy. I don’t know about their traditional term polices.

With cyber security concerns, It is really shocking that insurance companies don’t all take credit card payments. If they get hacked, and someone gets your credit card info, personal monetary risk is limited to $0-$50. If they get your checking/savings info you can lose thousands with no recourse.

Paying a little extra for transaction costs, would be a great trade-off for added security. First major insurer to adopt this gets ALL my business!

April 6, 2018 at 1:26 pm
    Jeff Root

    Hi Colin,

    Credit cards expire and result in higher lapses than other forms of payment – that’s the core reason most carriers don’t allow it. Most allow your initial payment to be on a credit card, but not recurring payments.

    Thanks for the heads up on AAA!

    April 18, 2018 at 11:10 pm
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