Premium Funding Explained
Although ensuring you have the most suitable insurances in place to protect your business is crucial, it can be a substantial upfront cost to your business each year. However, it doesn’t have to be. Premium Funding is a finance solution that allows businesses of all sizes to break down their annual insurance premiums into more manageable repayments, most commonly monthly.
Here we explain a bit more about Premium Funding and what some of the benefits are to your business.
How it works
Just like when arranging your insurance policy/cies, your Insurance Broker will assist you in arranging a quote from a Premium Funding company (Funder) to pay for your annual insurance premiums upfront on your behalf. Once you have accepted the quote, all you have to do is make the agreed periodic repayments to the Funder. Simple.
It’s fast and easy to arrange
Premium Funding can be arranged online in a matter of minutes. Most Funders have simple online portals where you can review and accept your quote, or alternatively you can authorise your Insurance Broker to accept the quote on your behalf.
It’s a simple flat fixed interest rate loan with no additional security required
Premium Funding arrangements are normally short-term, flat fixed interest rate loans, which means you are protected from interest rate fluctuations and will always know what your repayments will be. There are usually no additional guarantees required as in the majority of instances the insurance policy/cies acts as security for the loan, which means that your Premium Funding loan should not impact any existing finance facilities that you already have in place.
It frees up your cash flow
Cash flow is of the upmost importance for businesses of all shapes and sizes. By breaking down your annual insurance premiums into periodic instalments, you can free up your cash flow to use in other areas of your business.
The interest charges may be tax deductible
Interest repayments may be tax deductible as a business expense. Talk to your accountant.
Flexible repayment options are available
Most Funders offer flexible options, which means you can choose the instalment terms for the loan.
Multiple payment methods are available
You can choose how you would like to make your repayments, with Direct Debit, Debit Card or Credit Card options being offered by most Funders.
You can pay for multiple insurance policies with one periodic repayment
Do you have multiple insurance policies in place to protect what you work hard for? No worries. You can avoid multiple instalments by rolling all your insurance policies into the one Premium Funding contract so that you only have to make the one recurring payment.
So when it’s time for you to renew your insurance, ask your Insurance Broker about Premium Funding to see if it is right for you and your business.