Paying Insurance Premiums with a Credit or Debit Card – Risky

Thinking about buying some insurance and want to pay monthly with your debit or credit card? Sorry to say, we do not recommend it. Sure, you can pay for insurance on a monthly basis, but this is not the advisable method to do so with life or health insurance.

Before we get more into the meat of this article, please realize that no offense to your financial strategy is intended. As an agency who has served many people for over 20 years, we have the data and years of experience to support our opinion.

As we are an health and life insurance agency, it is our job to ensure financial security for you and your family. It is not exposing your to unintended lapses of insurance. This, of course is a concern if you ultimately want peace of mind, right?

We never want our clients to accidently lose their valuable protection especially. Imagine being in the hospital or passing away not realizing the insurance company was unable to receive it montly payment.

Talking to people age 50-85 five days a week, I occasionally encounter many who wonder why insurance companies do not like credit or debit (checking) cards. This includes those of you who like to use your Direct Express card issued by the Social Security Administration.

Here is the first and simplest reason insurance carriers do not like or even accept credit/debit card payments.

First, it costs them money to accept a credit/debit card. The premiums they charge are quoted on a cash basis, not credit.

The card company charges the insurance company a percentage of your premium for each transaction. Yes, even on your checking/debit card, a fee will be charged to the insurance company. As a result, in order to obtain the full premium owed for the protection and benefits of the policy, they will often charge you a higher premium for accepting your card. Please understand, the vast majority of seniors pay their life and health insurance with a monthly, automatic bank draft directly from their savings or checking account. This bypasses the debit/credit card fees, period. This is the safest and most reliable way to pay your monthly insurance bill. Many insurance companies will refuse a credit card/debit card entirely.

We understand that some of you like to handle your bill payments with your card. I often do it myself, so I “get it.” The problem remains, while we can be cautious with our cards…card fraud can happen anywhere, from the grocery store, a local restaurant or even an unsecured, online transaction. My favorite spot (said in sarcasm) is at a gasoline pump. More on this in a bit.

For insurance purposes, let’s get to the #1 reason you should never use a credit or debit card to buy and life or any health insurance… aside of the higher cost to you.

Card expiration and credit/debit card fraud.

Many people will incur some type of threat or real card “fraud” at some point of their life. Quite a few us know someone who has had their “card” number changed because of fraudalent charges on their account. When card fraud occurs, your bank or credit card company will automatically cancel that card and number. This also means every automatic bill payment to that card you arranged is cancelled. What about card expiration? Do you have it memorized and will you remember to contact the company to give them the updated information? If not, your policy would go unpaid.

Do you see the problem brewing here for your insurance coverage?

This is now a leading cause of insurance policy lapse. Can’t tell you how many people I have talked to consumers who forgot or didn’t realize their policy was no longer paid up and lapsed worthless.

Many people whom I have done policy reviews with have been shocked to find out their policy expired while sitting in a drawer or their firesafe. Ladies and gentlemen, we simply cannot recommend a form of payment where your coverage could be jeopardized because your card number changed to protect you from further debit/credit card fraud. It is our job to create financial security for you and your family/loved ones.

Direct Express Card

Those of you folks who have a Social Security Direct Express Card, this applies to you as well. The Direct Express card is nothing more than a debit card linked to a bank account. It was setup by default by Social Security to deposit your monthly benefit.

If you want to purchase insurance, do yourself a favor, find a bank or credit union and open a checking account there. Request a debit card, the routing and account number of the bank/credit union (ask for a printout from them). After you have this account information, go to the official Social Security Website or your local office and give them the routing and account number on the printout provided by the bank/credit union. Request to have your monthly benefit direct deposited into your new account you set up. They just need the information you provided to get your Social Security disbursement into a secure and more financially flexible situation. Now you can set up reliable, automatic bank draft arrangements with your insurance company that don’t stop if card fraud occurs. Your insurance premiums will also be lower and you will have more options available to you. To be clear, most insurance companies do not accept credit or debit cards. Direct Express Cards are not exception.

With the automatic bank draft recommendation, the burden is on the insurance company to withdraw the funds on a preselected date of the month you choose. Monies can be withdrawn directly by your insurance carrier from a checking or savings account.

When paying and insurer who accepts a Direct Express card or other…

If your card number changes or expires, the burden is completely on you to make sure the insurance company has your new info. Unfortunately, this is often overlooked resulting in a lapsed insurance policy.


While debit and credit cards are certainly a nice way to pay for goods and services elsewhere, insurance should not be one of them for good reason…potential policy lapse. It’s not a big deal if the Netflix, Cable or Internet bill is missed, but a lapsed life or health insurance policy that you own, paid on and that protects you and your family financially, is different entirely. Don’t end up one of those people with an expired policy because of a credit card number change/expiration. It is your responsibility when your card information changes, not the insurance carrier. They will just consider this non-payment.

What do you or your family do if your policy lapses unintentionally because of an expired or cancelled card? An insurance policy must be paid timely or it will not pay out the benefits written into the contract. The contractual agreement written into any insurance policy will require the payments to be remitted within 30 days of the due date or the policy lapses. It is the only obligation you have once you have been issued policy.

I have had my personal credit card number changed a couple times. I used it at the wrong gas station and it set off a series of bogus charges. The credit card company fraud department said the charges look suspicious and they denied payment. Glad they did. My card company proceeded to cancel my credit card after speaking with me. I was assigned a new account number and card from that point.

No, I did not have any insurance premiums on this card but several other autopayments.

Insurance companies are required by law to give you a 30 days grace period on payment. If it is not rectified in that time, your coverage can and is often terminated.

I cannot in advise anyone to purchase any insurance with a credit, debit or Direct Express card. Our job is to protect you and your family. Because of potential loss of insurance protection, we strongly discourage it use for use. In all likely hood, you will be paying more for insurance than you would otherwise having an account at a bank or credit union. Just be sure to select one who will give you a no fee account for having Social Security direct deposit each month. Credit Unions offer this, Chase Bank and others as of 2022.

Hope this article has educated you on why your seasoned, independent insurance professional suggests that debit/credit cards are not a good solution to pay for your policy. Remember, he or she does this for a living. A seasoned independent agent/broker will always advise you according to best practices and experience.

As always, we appreciate your feedback in the comments below. If you want to explore your options for buying insurance with a credit or debit card, give us a call. 269-244-3420

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