Coverpay is rolling out a “buy now, pay later” option for general insurance from this month, extending the concept from the retail sector.

The product, aimed at individuals and SMEs, spreads the insurance bill over 12 fortnightly payments and has a $7 management fee for each instalment.

Coverpay, which recently raised $2.5 million in launch funding, says its platform is embedded into a merchant’s existing transaction process and can be used at the checkout for online policy sales, within payment portals, on invoices or using embedded links.

MD Steve Gilbert says customers are encouraged to pay out their plan if they become “cashed up”, avoiding future fees and allowing people to use the platform to fill a short-term cash flow gap.

“Underinsurance continues to be a significant issue in Australia and we know that affordability is a key aspect of coverage choice,” he said. “We believe Coverpay can play a part in addressing underinsurance by directing more funds into a customer’s insurance budget.”

Initially, Coverpay will provide for payment plans up to $2500, with users also able to use an option for invoices up to $5000 through paying half as a deposit with the first instalment.

Mr Gilbert has more than 20 years’ experience in the insurance and finance industries and was the founder of Sports Underwriting. The Coverpay team also includes Rosalie Lau, Lisa Woodley, Vibul Imtarnasan and Kiersten Lethbridge.