The initial payment or premium for an insurance policy is due at the time of purchase. An insured has many payment methods that are available, is based on the billing method and a discount may be available when total amount of the premium is paid in full. The amount of the initial payment is usually included on the price quote.
An insured has many payment methods available to pay the initial payment for an insurance policy. An initial payment can be made by check, paid in cash as well as using a credit card. Each methods of payment has its pros and cons but the one thing they have in common is that they are options that are available to an insured. It was not too long ago that insurers would only accept a payment by check or cash. Usually an insured would go to a local insurance office and pay them for the policy. The agent would then send in the payment to the insurer. The initial payment for an insurance policy is important because only then is the insurance policy in force.
The initial payment for an insurance policy is primarily based on the billing method that was selected for the policy. A billing method if generally offered monthly, quarterly, semi-annually or annually depending on what the insured would like to do. If an insured decides to go with a monthly payment the initial premium will is a percentage of the total and then a specific payment for every month thereafter. The same type of calculation is done when any other type of payment method is chosen for the policy. Usually the initial premium will need to be paid regardless of the billing method that has been selected.
Many insurance companies offer a discount when the full amount of the premium is paid all at once. This is called a paid-in-full discount. Insurers offer this discount because they are collecting the full amount of the premium all at once. When an insurance premium is paid in full the insurer no longer needs to send a bill and process a payment. This reduces the amount of work and cost of the insurance company because the only bill they will need to send is for the policy renewal. This type of discount will benefit an insured who can afford to pay the entire premium in full.
The total amount of premium for an insurance policy will appear on the rate or price quote that has been prepared for an insured. Many times a billing summary will be included with the quote that will have a list of payment methods and the premium that is due. This gives the insured the option to choose the billing plan that is right for them.