The Pros and Cons of Paying for Insurance by Direct Debit
Insurance policies offer a number of payment options, from paying in one lump sum to spreading payments out equally over the term of the policy. Sometimes, insurance companies will offer the option of making payments by direct debit. This has both pros and cons, and both sides should be considered by anyone looking to make a decision about how to pay for their insurance.On the pro side, paying for your insurance by direct debit can often save you money. It means that you will not have to remember to write checks or mail payments, throw saving time. Because your account is directly linked to your insurance policy, you can also be confident about not going through a lapse in coverage if you forget to send in your paperwork. However, paying for your insurance by direct debit can also be a negative experience, particularly for those whose bank balances are more closely managed and do not have a cushion to cover emergency funds. If you pay by direct debit rather than by writing checks, you must be sure to have the amount required by your policy in your account every time a payment is due, as direct debits due to lack of funds can carry with them heavy fines imposed both by your bank and your insurer.If your bank offers the insurance policy you require, you may be able to save money by letting them debit the amount directly from your account, however again you run the risk of encountering fees and penalties if you overdraw your account.
