Annual Insurance Policy

What Does Annual Insurance Policy Mean?

An annual insurance policy is a policy paid on a yearly basis, rather than monthly. A policyholder who pays a yearly premium receives coverage for one year. Annual insurance policies are available for a wide range of insurance products.

Insuranceopedia Explains Annual Insurance Policy

The benefit of annual insurance policies is that the policyholder only needs to make one payment for a twelve-month period, which is more convenient compared to making twelve monthly payments for the same coverage. Paying yearly often works out cheaper too, since many insurers add a small surcharge for monthly billing, which is one of the reasons it pays to look at average car insurance costs before deciding how you want to be billed. Annual billing is also the standard for most life insurance policies, so it’s worth keeping in mind when you compare life insurance quotes. Annual policies are also advantageous for insurers, as they only need to track one payment per year. Drivers who want the opposite of a fixed annual policy sometimes look at pay-as-you-go car insurance, which charges based on miles driven instead of a flat yearly premium. At the end of the policy year, the policyholder typically has the option to renew the policy or let it expire.