A virtual card to finance your insurance premiums

14/03/2023

Some banks are offering customers a mechanism to spread the cost of insurance premiums over the term of their policy, thus avoiding a lump sum payment that might be too costly for some households. Such financing is typically offered free of charge to customers with at least two insurance policies.

These virtual cards can help you to spread your expenses over the year and manage your household budget. Under this arrangement, rather than sending you a bill, the bank charges a periodic fee representing a share of the total annual cost of your insurance policies. If you think this product could be right for you, consider the following before putting pen to paper:

• This is a financing arrangement, and therefore the bank must provide you with full pre-contractual information together with all of the appropriate explanations to ensure that you fully understand the terms and conditions.
• Weigh up the implications for any discounts or benefits you have for other products held with the bank. For instance, you sometimes need to direct debit a certain number of bills to qualify for a discount on the interest rate charged on another product, e.g. your mortgage. However, by financing your insurance premiums through virtual cards rather than paying them by direct debit, you may no longer qualify for that reduced rate. Be sure to check with your bank.
• As for cancelling your policies:
  • Whether financed or not, insurance policies can be cancelled as per the policy terms and conditions. You will usually have to give a month’s notice.
  • Any life insurance policy can be cancelled during the first 30 days, regardless of whether it was arranged in-person, online or by telephone. Other types of insurance can be cancelled within 14 days if taken out remotely.
  •  Should you wish to cancel your insurance policy, ask your bank what steps you need to take and how the associated financing will be affected.