There are times and situations when a high-value premium needs to be paid by a policyholder to the insurance company. The insurer applies for premium finance provided by the premium financing companies that are easily payable. This also helps the insurer to concentrate the larger sum of their money towards the assets or invest them in a more earning asset than paying the insurance amount. It is mostly suitable for people who are planning on taking a lump sum amount of money as insurance. It can either be personal insurance, life insurance, or insurances related to properties or businesses. It is mostly chosen by people with a large net worth.
[Also Read: 4 Tips to Finding the Right Health Insurance for You]
Some of the types of premium financing include:
Recourse premium finance: This is the most common type of premium financing. It is also called Traditional premium finance. It is almost similar to a loan and mostly the insurances are held to maturity. Collateral is submitted which is usually a house or an estate. This is suitable for people who do not have liquid funds.
Non-recourse or hybrid finance: In this type of premium finance along with the collateral provided, collateral money is also pledged with the third party every year. This is suitable for people who are able to pay the collateral cash.
It is important to understand the difference between the two different types of premium finances to be able to choose the right one. Approaching a premium financing company can help one take the load off their shoulder about worrying about which one to choose. A professional help goes a long way in helping choose the right kind of finances, understanding the legalities related to it, and choosing the best that suits the client’s request.
What are the benefits of premium financing?
- Avoids the payment of a large amount of cash at once.
- The insurer does not have to liquidate the money to pay for the premium.
- A single premium financing can cover multiple insurance plans.
- The retained capital stays with the insurer. They do not have to pay the money off their pockets.
- Is easier and quicker.
- There is transparency between the insurer and the company about the type of policy
Whom to approach?
Companies (like Imperial Premium Finance Solutions) dealing with commercial premium financing work on providing easy financial services to individuals. They help in relieving the business owner and the insurer of the financial burden and also provide an opportunity to the insurance companies to get in touch with a broader group of audience.
Such companies can provide short-term loans to acquire insurance coverage for both individuals and businesses. It is always advisable to approach a company or a financial advisor or a specialist to understand the functioning of the premium financing process and to choose wisely a plan that is suitable for all. Most of the companies provide a flexible plan that is beneficial to both the insurer and the agency. Approaching an experienced company can help the customer to find the best professional help.
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