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Premium Funding: Making your business insurance cover more affordable

By David Zovaro on

When it comes to payment, business insurance premiums can be an inconveniently large investment.

Premium Funding payment solutions can help to free up your company’s finances, enabling you to put them to more productive and immediate uses by investing in areas that directly impact the growth of your business.

What is premium funding?

Pay insurance premiums by the month

Premium Funding Programs are a flexible financial solution designed to enable businesses to spread the cost of their insurance premium(s) over equal monthly instalments of up to 12 months.

Removing the financial burden of a lump sum insurance payment can help to free up your cash flow so you can utilise money which would otherwise have been spent on insurance, to proceed with key investments essential to growing the business.

Premium Funding is “a form of finance that frees up money for other expenses or investments" in a business. (Insuranceandrisk.com.au).

The benefits of Premium Funding

Business Insurance is an absolute necessity, however the cost of insurance doesn’t need to restrict cash flow, or place limitations on what the business has set out to achieve.

Premium Funding payment solutions can be extremely beneficial for a number of reasons:

  1. Greater cash flow flexibility enabling reinvestment in your business – Premium Funding enables regular insurance payments in smaller instalments spread across the year instead of one lump-sum. The cost of a Premium Funding plan can often be fully offset by the more productive use of funds in your business that would otherwise have been utilised in a lump sum insurance payment.

    Click here to view an example of the financial benefits to be gained from reinvesting funds as an alternative to paying insurance in a lump sum.

  2. Low cost - A low–cost financing option with competitive fixed interest rates.
  3. Tax Deductible - Generally speaking you can claim a deduction on interest expenses, however, you should speak to your accountant for confirmation of what applies to your individual circumstances.
  4. Multiple Policies - You can pay for multiple policies on the same payment plan.
  5. No Guarantor Required - It doesn’t require personal guarantees, or charges over business or assets.

How does it work?

How Premium Funding works

Your insurance broker will guide you through the simple process of arranging Premium Funding. Below we have provided a brief explanation on how it works:

  • Premium Funding providers offer flexible payment arrangements that evenly split the total premium due into a maximum of 12 instalments. The number of instalments you select is dependent on your needs and wants.

  • Once your payment plan has been finalised and approved, the premium funder will pay the entire premium due directly to the nominated insurer(s).

  • Going forward, the premium funder will deduct the agreed monthly payments from you, in accordance with the terms of the contract.

The application process is far simpler than a bank loan and requires fewer background checks and credit reports.

It’s also good to know that upon renewal of your insurance each year, you can easily rollover your existing Premium Funding contract, minimising the need to complete additional applications.

If you believe that Premium Funding would benefit you and the financial position of your business, please contact your Whitbread broker to discuss your options. Alternatively, please contact us on 1300 424 627.

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This insight article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice.  Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website. 

 

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