Are you saving for a reason?

[disneysteve]

May I ask why you pay your insurance premium in a lump sum?

Many companies charge a fee for spreading out the payments. I know Allstate charges me $3.50 per payment if I pay less than the full amount due. I'm billed every 6 months, though, not annually.

[InDebtInDC]

Many companies charge a fee for spreading out the payments. I know Allstate charges me $3.50 per payment if I pay less than the full amount due. I'm billed every 6 months, though, not annually.

Progressive charges me $1 per payment. Over 6 months, I don't think that's really much for a premium that's about $800. I would much rather put that in my retirement account and earn more than $6 over 6 months.

But the biggest thing that worries me is that when you cancel your policy before term your pro-rated amount is always less than what you would have saved if you paid monthly. I don't know why but they always calculate the proration in their favor. Plus it takes a really long time to get your refund.

That's why I generally don't like to pay car insurance in lump sums.