Thursday, March 21, 2013

Premium Finance- The Call Of Today’s Insurance Market

Premium Finance- The Call Of Today’s Insurance Market

"Premium financing" typically means involving in the act of advancing capital, directly or indirectly, to an insurer on the request made by an insured pursuant in accordance to the stipulations of a premium finance contract, in which the insured allocates the unearned premiums, accumulated dividends, or loss payments as security for such advancement. The premium financing company is the company that assumes the responsibility to pay the insurance premiums on behalf of the client and in turn charge loan instalments. People trying to evade liquidation of assets can depend on a Premium finance which may prove to be a productive tool.

According to several chief marketers, premium finance is considered due to two major reasons. First, it can permit assets to continue being invested that else would call for liquidation to disburse premiums, or let funds that might otherwise go to premium payments to be utilized for investments with better prospective. Second, premium finance can evade creating aids to trusts. This financial tool, endowed to the clients by a premium financing company, is a way through which potential policyholders may get high insurance coverage without exhausting their financial assets to give their first year's premium. Policyholders scrounge the amount of premium money and pay back in installments, either in the initial year or over the duration of the policy. Premium finance is generally of three types- traditional recourse premium finance, non-recourse premium finance and hybrid premium finance. Premium finance is practical under the right situations. All probable circumstances need to be considered meticulously and careful re positioning of the investments should be done. In Premium financing, the funding is targeted for clients with a high net worth and life insurance policies with paybacks in the millions. Clients employing premium financing are doing so in a condition of buy-sell arrangement or an estate planning.