PPI analysts have noticed that more clients are shifting toward annual payments in recent years, most likely to avoid penalties and periods of non-payment. Late payments can jeopardise the client's coverage, resulting in delays of treatment in an emergency situation. By reducing the amount of payments per year, clients are able to minimize the chances of missing a payment. However, in addition to annual payments, there are generally three other frequency options - semi-annual, quarterly, and monthly. Each frequency option has their own respective advantages and disadvantages, and the option that's best suited for a client will depend on their specific needs.
The annual payment option is generally the most advisable option, paying full 12 months in one go, as it is not only the cheapest option but the safest one as well. The annual option is the cheapest as there are no admin fees or surcharges, with some insurers' clients saving up to 20% when paying annually instead of monthly. Insurers also generally accept all payment methods for annual payments. The only disadvantage with annual payments is that there is a large out of pocket sum at once, which may not be suitable to a client's financial situation.
The annual payment option is considered to be the safest choice because it minimizes the chances of missing a payment. An increased chance for delayed payments can have particularly bad results in case of an emergency as treatment cannot be started at a facility until the insurer guarantees payment. This is much less likely to be the case if the client only pays once a year.
Semi-annual payments will usually be slightly more expensive than annual payments, with a surcharge varying from 0% to 8%. However, it's still less risky than quarterly or monthly as fewer payments are needed per year, meaning smaller chance of delayed payments. Most insurers only accept credit cards for semi-annual payments, although a few still accept bank transfers. Similarly to annual payments, the semi-annual payment option does require relatively large out of pocket lump sums. However, semi-annual payments serve as a viable solution for those who can't pay annually but want to avoid monthly/quarterly risks.
Quarterly & Monthly
Quarterly and monthly payment options are very common and popular ways of avoiding the large out-of-pocket expenses incurred with annual or semi-annual. However, the surcharges can add up in the long term, and there is a higher chance of entering non-payment periods, risking delays of treatment in emergencies. For quarterly, nearly all insurers only accept credit card, though very few may still allow for bank transfer. For monthly payments, there are no insurers that accept bank transfer; they only accept credit-card.
If you do choose to pay monthly or quarterly, here are some tips to avoid the risk of entering non-payment periods:
- Always ensure that your card does not expire midyear, especially if you use the same card for renewal.
- If you lose or replace your card, make sure you give updated details to your insurer.
- Do not pay by bank transfer, even if it's available as an option for quarterly or monthly.
- If given the option to personally make each payment per month or quarter online, we usually recommend allowing your insurer to hold the details. Doing so will allow for auto-payments, which will avoid the risk of you not being able to access the payment site for any reason.
When paying for medical insurance, using a credit card is the most advisable method of payment as the transaction is instantaneous, which means faster coverage confirmation. Bank transfers can take longer to allocate and confirm payment, which results in delayed cover confirmation. Cheques are also inadvisable as they can take weeks to confirm payment. Some insurers may also allow direct debit or cash deposit depending on local laws and banking capabilities.
When choosing how to pay your medical insurance premiums, make sure you take all factors into account and weigh up the risks. When choosing your plan, always ensure that the plan allows for your preferred method of payment. Some local laws have tight restriction on insurance payments, and not all insurers offer all the different payment options.