Premium Finance FAQ

What is Insurance Premium Financing?

It is a loan made between an individual or company (an insured") and the premium finance company ("lender") to pay for the cost of the insured's insurance coverage. Typically, the insurance agent who handles the insurance coverage on behalf of the insured is the one who arranges for the financing for the insured. The loan is collateralized by the unearned premium on the insurance policy being financed.

What are the advantages to premium financing for the Insured?

• Improves Cash Flow
  Eliminates the need for a lump-sum payment to the insurance company.
• Fixed Rate
  The annual percentage rate is fixed for the life of the loan.
• Consolidates Billing Process/Payments
  Multiple insurance policies with various effective dates can be placed on one finance agreement which provides for a single payment option, which eliminates the need of paying multiple monthly or quarterly checks to various insurance companies.
• No Pre-Payment Penalty
  In most states, early payment of a finance loan will not result in additional charges beyond the interest earned until the time the loan is paid-off.

What are the advantages to premium financing for the Agent?

• Improves Cash Flow
  Prompt funding improves the agency cash flow by receiving all commissions up front.
• Accessible and Efficient Processing Helps Preserve and Retain Business
• Online Quoting and account status information
• E-mail or fax requests for expedient service
• Online payments
• Special Programs
  Customized pay plans available to suit your client's special needs such as seasonal businesses.