Insurance agents are more than just insurance sales people. They can be viewed as a trusted advisor. They are in the business of helping their customers obtain the coverage they need whether personal or for their business. They are there to offer support that will help determine the coverage that is necessary to protect their customer financially. Some people may not understand the benefits of premium financing. Some people may worry that this is a product that is completely dependent upon interest rates or policy performance. But this is not always the case. Even when interest rates have been high and financial markets have been unstable, agents are continuing to explain to their customers why financing their policy is still beneficial. Some people can be discouraged when choosing the option of financing. All they can focus on is the amount of interest that they will pay over the course of the loan. Now of course there will be interest, you can’t get anything for free in the world. But even with paying interest, it is smarter for businesses to go this direction because of all the benefits it will bring about by having more funds readily available for business ventures.
All businesses are looking to grown their book of business. That’s the name of the game. But in order to grow your business, you need to have an abundance of cash flow to make things happen. Business owners are always looking for investment opportunities that will give them a high return on their money. This is why it is smart for businesses to consider premium financing for their insurance policies, because it allows them to have more working capital to invest elsewhere. Having retained capital is crucial in growing a business.
Retaining your company’s capital means you can hold onto your money and invest in opportunities that may present themselves. In order to have capital, you will be paying interest on a loan that covers the cost of the insurance premium. Premium financing is not free insurance. There will be interest and fees associated with the loan. It is viewed as a tool that can help customers minimize the out of pocket expenses associated with insurance premiums. There are many different types of coverages that businesses need in order to operate. Costs of insurance premiums can vary greatly, but my financing their policy they are able to make their money work for them in a more effective manner.
Financing the insurance policy will happen thru a third party. The insurance company works independently of the finance company. Now many finance companies will reach out and want to work with different agencies, but it is good to understand that the agency is free to choose whichever finance company they want to use. It is important for customers to understand that their insurance agent will always look for them the best deal. The relationship between the insurance agent and the customer is a trusted one, and the agent wants to broker a deal that works best for their customers. Paperwork is completed online and the finance company and the insured do not actually ever have to meet. The insured will sign a promissory note that will guarantee they will pay back the loan. And as long as the insured make’s their payments on time, the only fee associated with the loan will be the interest. However, if payments are late, or policies are cancelled, there can be more fees associated with the loan. The insured has promised to repay their debt, and if they fall back on that, the finance company is able to come after the company to collect their money back.
When an insured decides to pay for the policy by financing it through a finance company, they are able to have the peace of mind knowing that they have the coverage they need, while not depriving their business of cash that is needed elsewhere. One of the most over looked perks of financing an insurance policy is the few months on the policy where you will not have to make a payment. Insurance premiums are a 12 month policy. When you choose to finance that policy, the term is typically a 9 month policy. This means that you start paying on the loan as soon as the policy goes into effect. But after the last payment is made around month 9, you will still have 3 more months of a valid insurance policy with no payment required. Anytime a loan is paid in full, a business will have the extra cash flow to put back into their business and hopefully help the business prosper.