There is no “discount” on life insurance for paying annually.  However, paying annually is the least expensive method of payment.  Most companies will also allow you to pay monthly, quarterly, or semi-annually.  Since the insurance company has to process more payments when you don’t pay annually, your total annual cost will be higher if you choose a different method of payment.  

Statistics have shown that policies which aren’t paid annually are more likely to lapse.  Often, there are problems when people change banks and their automatic monthly withdrawal does not go through since they forgot to notify the insurance company.  A life insurance policy will have a grace period for payment (usually 30 days), but if you wait too long, the insurance company would cancel the policy.   Quarterly and semi-annually payments are not typical payment modes for most people since they will usually budget annually or monthly for insurance expenses.  Quarterly payments have the highest lapse rate.

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