Hello. I am about to buy a car insurance policy but I could not decide if I should pay the insurance premium in full or monthly. Can you help me decide which one is better for me?
This question is actually something that occupies everyone’s mind while buying an insurance policy. Also, there is not one single answer to the question because both monthly and annual payments have some certain advantages.
Paying Your Insurance Monthly
First of all, you will save from the time value of money. Because of inflation, 1000 dollars 1 year from now worth the same as around 960 dollars of today. Our money depreciates as time passes. Thus, if you pay your insurance premium on a monthly basis, you can use the rest of the money on some financial investments such as bank deposits.
Secondly, if you have a fixed income every month, paying the insurance premium in full can give you some financial difficulties. So, fixed-income people should choose monthly payments.
Paying Your Insurance Annually
Most companies make some discounts on annual payments. In this sense, if you have enough money to spend on insurance which will not hurt you financially, then an annual payment would be a better option for you, as you will be paying less for your insurance.
But before you pay for your insurance, I recommend you to read my post about how to find the cheapest insurance online in order to reduce your insurance costs at great rates.
If you have any more questions, you can write it in the comments section below.