Insurance Premium Financing

Insurance premium finance is a specialized finance facility that allows an insured to spread an insurance premium payment over the term of the policy rather than paying the full premium up front. The insurance premium finance company, as lender, advances premium payment on behalf of the insured. The insured repays the lender according to an agreed payment plan, usually consisting of a down payment followed by a certain number of instalments. The unearned premium of the policy being financed serves as security for the loan and, generally, no other forms of collateral are required.

Benefits of Insurance Premium Financing

Premium financing offers a number of benefits, which can include:

  • Improved cash flow and liquidity
  • An additional source of borrowing, typically with no impact on the availability of existing credit facilities
  • A potentially tax-deductible interest expense (clients should always consult their tax advisors regarding tax issues)
  • More liberal payment terms than many insurer plans
  • Potential premium discounts from insurers for upfront premium payment
  • The availability of flexible payment plans corresponding to seasonal business cash-flow needs

At Eagle Africa we have very well negotiated premium financing rates, taking the burden of such negotiations from our clients.

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