Let’s discuss the best ways to pay insurance premium using credit cards and earn reward points/cash back on the same.
Over the next few months, we all will have a hefty insurance premium due on us. Typically, a household’s annual insurance premiums would easily be above 100k+. Given that we all have those dreaded LIC policies sold by our ‘insurance wale uncle’ where premiums run into tens of thousands. Plus, the actual term insurances and health insurances that we own. So why not pay these insurance premiums by credit cards and earn handsome reward points.
Best Ways to Pay Insurance Premiums using Credit Cards
Insurance premium payment using Amazon Vouchers
AmazonPay allows insurance premium payment for nearly all insurers, including LIC. The best way is to buy Amazon vouchers thru your credit cards and use those for premium payments. The reason is we can buy Amazon vouchers at a decent discount thru multiple ways as discussed here. I primarily rely on HDFC and Amex credit cards to buy Amazon vouchers for my premium payments.
Using HDFC credit cards, you can buy Amazon vouchers thru the SmartBuy platform at ~6-16% discount depending on the credit card you hold.
Similarly, you can buy Amazon vouchers using Amex credit cards thru its Reward Multiplier website.
Tips on making insurance premium payment
- Amazon vouchers are like parallel currency, so even if you buy them in excess you can use them to pay off your other utility bills, Ola/Uber rides, Amazon purchases etc.
- Plan a few months in advance and start buying vouchers from SmartBuy and Amex Reward Multiplier websites. As there is a monthly limit of 10K on SmartBuy and 25K on Amex Reward Multiplier. Thus if you have a large premium due, you can start accumulating vouchers a few months in advance.
- Buy vouchers in multiple ways and add them to your account. Eg: 10k vouchers thru SmartBuy and the rest thru Amex. This way you can maximise your reward points.
- Amex credit cards don’t give reward points on insurance payments, but they give reward points + multiplier benefits on buying Amazon vouchers. Thus, you can circumvent the Amex rule of zero reward points on insurance payments. Moreover, not to forget that these spends are counted towards milestone spending.
- If you hold Amex MRCC/Gold card, you can split the voucher purchase to meet monthly milestones of 4 transactions and 20k spend (on MRCC card). Eg. If you buy vouchers worth 25k on MRCC in 4 or 5 transactions using the Reward Multiplier, you will earn 3000 reward points, roughly equivalent to 1200 rupees, a pretty good 4.8% reward rate.
- AmazonPay only allows insurance premiums of under 1lakh thru its platform. Plus, only 6 premium payments can be made in a month using credit cards/AmazonPay. Post that only UPI works. ( Thanks Gautam Garg for highlighting the same).
Insurance premium thru Payzapp
Payzapp is currently running an offer where you get 3x (1x base rewards + 2x bonus rewards) on making any payment of over 2k thru the Payzapp platform. Thus, if your insurer is listed on the Payzapp app you make insurance payments using credit cards and get up to 10% reward points. The only drawback here is this offer is limited to select HDFC Cards (Infinia, Regalia, Diners Black and Diners Privilege credit cards). Nonetheless, a 4-10% reward rate on insurance premium payment is not bad.
Insurance premium payment directly on insurer’s website
At times, it becomes mandatory to pay insurance premiums using a credit card directly on the insurer’s website. For e.g. when buying a new policy or the insurer is not listed on any third party platform eg. New India Assurance, Tata AIG etc.
If you happen to land in such a situation, make sure that your credit card gives reward points on insurance payments. You can use HDFC Credit cards to make payments as you get reward points on insurance payments with some capping. Few other cards that give reward points on insurance premium payment are Axis Ace credit card (2% cashback), Kotak Kaching credit card (up to 2% reward rate depending on variant), ICICI Amazon credit card (1% cashback), BoB Eterna (0.75% reward rate), SC Ultimate etc.
Remember that among the prominent ones Amex and Citi credit cards don’t give reward points on insurance spending. However, the Amex spends are counted towards your annual milestone spends and thus reward is not completely zero.
Other things to keep in mind
Do keep an eye on offer emails you get from card issuers. Many card issuers give bonus reward points or cashback on making insurance payments using credit cards during these months. I remember seeing Axis and Yes Bank running some offer in December itself.
Amex is famous for offering up to 10,000 reward points on insurance premium payments. Recently, Amex was running the offer in conjunction with another spend based offer of spending 1.25lakhs to get a 10k Taj voucher. It was a nice double/triple dip opportunity for Amex cardholders. I used the offer to pay some of our insurance premiums using my Amex Platinum Travel credit card. This made me eligible for 10K reward points + part of the 1.25L milestone spend target+ part of the annual 4L spend milestone.
Further, typically for life insurance premiums, one has 2 months window to make the payment. 30 days before the due date and 30 days grace period, post the due date. Thus, one can plan and make the most of the ongoing credit card offers. For other insurance policies, one can pay 30 days in advance in case a good offer comes along.
While you have to make the insurance premium payments every year, plan the same and put these on your credit cards. You can earn decent rewards on them. One way to think of it is, it enhances the RoI by a few percentages on those low earning LIC policies that we all own.
Please do share how you maximize your reward points on insurance payments? Do share if I have missed any good method of paying insurance premiums thru credit cards.