EFT

Electronic Funds Transfer (EFT) is a term used for payment plans which automatically take the payment from your account. This is usually done as a monthly plan. There is usually a service charge added which can range from approximately 3% to 6%

An authorization form is required with a void cheque or bank authorization form.

The payments are taken on a schedule agreed upon by the person and the insurance company. This is usually a one year monthly payment plan with two months paid upon the start of the policy followed by 10 payments. The customer is always paying a month in advance. This gives the insurance company time to cancel and still have time on risk if there is a non-sufficient funds (NSF) or stopped payment.

There is some concern that the insurer now has the right to take whatever amount of money they want from your bank account. This can make you feel as if you do not have control of what is coming out of your account.

This is true. If you have set up an EFT and there is a change in your premium then yes, the insurance company does have the right to take more or less from your account. It is usual that you will receive some notice of the change but it is not required. An example is when you add a vehicle to your policy. You request the change and the the underwriter adds the vehicle. This generates an increased premium. If your next withdrawal is coming up rather quickly it could catch you by surprise.

The insurance answer to this problem is to either have an estimate given to you when you add the vehicle for the increased amount. Then you need an estimate of what your next withdrawal could be. This way you can be prepared.

Some people will only do post-dated cheques on a monthly plan. This prevents the insurance company from taking an unexpected withdrawal from the account. Be aware that most companies will charge a non-sufficient funds (NSF) fee for a failed withdrawal and can cancel insurance for failure to make payment.

Discuss your options with your broker or agent.