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Commercial Insurance Premium Financing

By July 16, 2019 No Comments

Most Insurance Agency have clients who are in need of premium financing. This is a great option for insureds who want to have control over their funds and pay for their insurance coverage over the course of a few months rather than giving up a large amount of money all at once. Premium Financing offers insureds a loan that they will take out that will cover the cost of their insurance premium. The main benefit of doing this type of transaction is that the company will get to retain control over their funds. It also is very beneficial for companies that do not have the cash flow that is needed to pay for their premiums. 

The process of obtaining a loan for the insured is a rather simple and straightforward process. The insured purchases insurance from an agency. In providing the best options for the insured they offer premium financing to their client. If the insured wants to explore that options, the agent then gives them the sensible financing solutions, Capital Premium Financing is the best solution. We will offer the insured loan terms and a payment amount that the client will agree to. The client will then sign a Premium Finance Agreement and provide a down payment. The down payment is usually 25% of the total policy. The duration of the loan is always less than the term of the policy. Loans are typically 9 month terms, while the insurance policy is good for one year. Then Capital will fund the loan balance and the client will repay the loan over the stated term.

It is a good idea to sit down and determine if premium financing is a right fit. It is worthwhile to weigh the pros and cons. Some of the positive aspects include being able to finance multiple insurance policies with one loan. The insurance agent and Capital take care of all of the tedious paperwork. Client’s do not have to worry about getting their credit pulled, or what their credit score is, or the process of approval. The insured has control over their capital, they are able to invest their money into their business or other investment opportunities rather than having it tied up in insurance premiums. They also don’t have to worry about having to liquidate any assets because they are trying to come up with money to pay their insurance premiums. There really is only one main con of financing, and that is the fact that you are going to pay interest on the loan. However, the pros seem to outweigh the cons. The interest is minimal, and if it allows you to invest your money in other business opportunities, it may be worthwhile. 

Premium Financing is obviously not for everybody. Every business operates differently and chooses to spend their money in different ways. But if financing an insurance policy is a good fit for the insured, know that Capital is the place to handle the loan. We have the experience and knowledge that will make the process quick and easy. We have financing options for every business and cover every different type of commercial insurance.


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