Insurance - 2 payments in advance???

rg0r

rg0r

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Anybody can explain why insurance companies take 2 payments in advance as a deposit?, i am still unclear. They've mentioned this is because they take a month in advance.... so where does that 1 extra month go when I decide to finish my policy?? lol.

I asked the agent, he could not explain clearly. Please someone enlighten me.


And how is it that my insurance becomes cheaper the more I bundle on such as life insurance, home insurance than just having motorcycle insurance and car insurance, again makes no sense.

Thanks for your help in advance :-)
 
you dont pay the last month.. its first and last but they wont tell you it's first and last...
 
Insurer's take premium in advance as it would be near impossible to collect premiums after the fact from people who did not have claims. When the premiums are paid in advance we all put into a pool before anyone knows who will have claims and for how much. The advance month premium is also used in the event of a missed payment, the deposit premium is brought forward so that coverage can continue for a period of time which allows the insurer to let you know a payment did not go through, and it gives you the time to figure out why the payment didn't clear and to replace it. The alternative would be a payment was missed today, and tomorrow no coverage would exist.

Much like anything else, some providers offer bundles with discounted pricing and it makes perfect sense. Most insurance companies offer discounts when you buy multiple policies from them. Many fast food restaurants also discount your fries and drink too if you put them together with the sandwhich also.
Multi line discounts are offered as an incentive to purchase a product that is not mandatory, like property and life. ​
 
Thank you.. Wish they trained their own agents better so they can be clear as you...

As for the bundle... Any idea if it is easy to get rid of life and home insurance without paying some penalty? Only reason I took it because it came out cheaper by $20
 
Most insurance companies do charge penalty for cancelling home policy mid term. And if you cancel property policy, your auto policy will likely go up in price as you will lose your mutli policy discount.
I am not licensed to write life insurance in Ontario so I would suggest that you contact a life agent and get to give you an asnwer in writing.
 
I was told by my agent that they take 2 payments (one of them for the first month and one for next month) is so that they always have a payment from you in case of a claim the insurance company can't say that you weren't covered. For example; you pay on January 1st, then February 1st, then at the end of February you send them a cheque for March but it gets lost in the mail, or your electronic payment gets applied incorrectly, March 2nd you have an accident, the insurance company says "sorry, you didn't pay, you have no coverage." Whereas if they took 2 payments on January 1st and you continued to make your monthly payments, that lost payment for March isn't relevant because they already have an additional month paid from you.
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