Insurance

Can Monthly Insurance Be More Worthy than Yearly Payments?

Author Bowtie Team

Updated on 2025-07-10

Disclaimer: This article is translated with the assistance of AI.

Choosing between monthly and yearly insurance payments can be tricky. Should you pay annually or monthly? Bowtie breaks it down and shares tips to make monthly payments more cost-effective than yearly ones.

What Are the Payment Methods for Insurance Premiums?

Annual Payment: Pay premiums once every 12 months. This is the most common and often the cheapest payment method for various insurance policies.
Semi-Annual Payment: Some insurance companies allow policyholders to pay premiums every 6 months. However, the semi-annual amount is typically more than half of the annual premium, often calculated as the annual premium multiplied by 0.52.
Quarterly Payment: Some insurers permit policyholders to pay premiums every 3 months. The quarterly amount is usually more than a quarter of the annual premium, typically the annual premium multiplied by 0.265.
Monthly Payment: Insurance companies generally allow policyholders to pay premiums monthly. However, the monthly amount is often more than one-twelfth of the annual premium, usually the annual premium multiplied by 0.09.
Lump Sum Payment: Pay the entire premium for the policy in one go, with no further payments required during the coverage period. This is commonly seen in policies with savings or investment components, such as whole life insurance, endowment life insurance, critical illness insurance, and investment-linked assurance schemes (ILAS). .

Most Common Insurance Premium Payment Methods

We’ve just covered the different ways to pay insurance premiums, with annual and monthly payments being the most common. Let’s dive deeper into the differences, pros, and cons of these two options:

Annual Premium Payment

For various insurance products offered by traditional insurers—whether it’s medical, life, critical illness, or accident insurance—annual payment is typically the cheapest option. Why? Paying annually means policyholders prepay the full year’s premium at the start of the policy year. Insurers often reward this with discounts, making the total cost lower compared to semi-annual, quarterly, or monthly payments.

Advantages	Disadvantages
Policyholders get the most cost-effective premium rates. Paying once a year reduces the chance of forgetting a payment.	The annual payment is a larger lump sum. If you have multiple policies like medical, life, and critical illness, the total could amount to tens of thousands of HKD in one go. Less flexibility in policy management—you often have to wait a full year before making changes. If you cancel the policy after the cooling-off period, the paid premiums are usually non-refundable.

Monthly Premium Payment

Traditionally, monthly payments were an alternative to annual payments offered by insurers. In recent years, with the rise of online-only insurance, many digital insurers have made monthly payments the default—or even the only—option. For instance, all Bowtie insurance products exclusively accept monthly payments via credit card auto-debit.

Advantages	Disadvantages
Offers greater flexibility in managing policies, allowing quicker decisions like switching plans. Paying in installments makes it more affordable, freeing up funds for other investments.	For traditional insurer products, the total annual cost of monthly payments is higher than an annual payment. Forgetting to pay can lead to late fees or interest charges. Persistent non-payment could result in policy lapse.

Which Premium Payment Method Should You Choose?

When deciding on a premium payment method, the key is to choose based on your financial situation. While annual payments are often the cheapest option, it’s crucial to assess your cash flow and whether you can handle a one-time expense of thousands or even tens of thousands of Hong Kong dollars. Don’t put the cart before the horse by scrimping on essentials just to snag a discount.

If annual payments feel like a stretch but you still want to save, some intermediaries might suggest paying the full year’s premium with a credit card and then applying for an installment plan with the card issuer to ease the burden. Be mindful, though—such installment plans often come with handling fees. Whether this is more cost-effective than monthly payments depends on the monthly fees you’d incur. The simplest way? Compare the total annual premium difference between yearly and monthly payments against the total handling fees charged by the bank.

How Can Monthly Payments Be Cheaper Than Annual?

Traditionally, monthly premium payments are thought to be pricier than annual ones, but with the rise of pure online insurance, this isn’t always true. Take Bowtie, for instance. By leveraging technology and cutting out intermediaries, we keep our insurance products highly cost-effective. Whether it’s VHIS , Term Life Insurance , or Term Critical Illness Insurance , our premiums are incredibly competitive.

On top of that, Bowtie operates on a “Pay As You Go” flexible contract model. Customers can enjoy various protections with monthly premium payments without stressing over payment methods. With Bowtie, monthly payments can sometimes even beat annual ones in value!

The table below compares several high-end Semi-Private Room level full reimbursement VHIS products in the market. It shows why Bowtie’s monthly premiums can be more affordable than annual payments from other insurers (assuming the policyholder is a 30-year-old non-smoker opting for $0 deductible ):

*High-End VHIS Products*	Average Monthly Premium*
Bowtie Pink (Semi-Private) (Monthly)	$834 👍
Company A (Annual)	$1,335
Company A (Monthly)	$1,416
Company B (Annual)	$1,166
Company B (Monthly)	$1,259
Company F (Annual)	$1,085
Company F (Monthly)	$1,171

* Rounded to the nearest whole number

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^{*Full coverage shall mean no itemized benefit sub-limits, and applies to designated benefit items only. The benefit payable shall be subject to the remaining deductible (if applicable), annual benefit limit, lifetime benefit limit and other limitations such as reasonable and customary charges, a pre-existing condition, “List of Designated Hospitals in Mainland China” and receiving medical treatment in the United States. For detailed terms and conditions, product risks, and exclusions, please refer to the relevant product website and policy.}
^{^For example, with Bowtie Pink (Ward) and the deductible option HK$80,000, the monthly premium for a 30-year-old non-smoker is HK$197. The premium comparison above is based on similar medical insurance plans with the ward level (data source on 27, July 2023), HK$50,000 to HK$80,000 deductibles, for a 30-year-old non-smoker. Different medical insurance plans have different coverage and benefit limits. For details, please refer to the relevant insurance policy and its terms and conditions.}

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Author

Bowtie Team

The Bowtie Life Insurance Company Limited is an authorized life insurance company and Hong Kong’s very first virtual insurer approved. Through the use of modern technology and medical expertise, Bowtie offers an agent-free, commission-free and more convenient online platform for customers to quote, apply and claim for Voluntary Health Insurance Scheme (VHIS) anytime anywhere. Bowtie is ranked first in the direct channel sales throughout 2021. Stay up to date at www.bowtie.com.hk