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Insight

Premium Funding: Making quality business insurance cover more affordable

By Michael Giansiracusa on

When it comes to payment, business insurance premiums can be an inconveniently large investment. This is particularly relevant in the current market, with widespread economic uncertainty and premium rates on the rise.

Premium Funding payment solutions can help you maintain essential insurance coverage, while freeing up your business finances for other immediate investments that directly impact the growth of your business.

What is premium funding?

Pay insurance premiums by the month

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

Premium Funding Programs are flexible financial solutions designed to enable businesses to spread the cost of their insurance premium(s) over equal monthly instalments of up to 10 months.

Removing the financial burden of a lump sum insurance payment can help you maintain quality business insurance coverage, while freeing up your cash flow. This enables you to utilise finances which would otherwise have been spent on insurance, to instead proceed with key investments essential to the growth of your business.

The benefits of Premium Funding

Business Insurance is an absolute necessity, however the cost of insurance shouldn't restrict cash flow, or place limitations on what your 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 allocated to 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. Speak to your accountant for confirmation of what applies to your individual circumstances.
  4. Multiple policies - You can incorporate and pay for multiple policies on the same payment plan.
  5. No guarantor required - Premium Funding doesn’t require personal guarantees, or charges over business or assets.

How does it work?

How Premium Funding works

Your Whitbread broker will guide you through the simple process of arranging Premium Funding.

Below is 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 10 instalments. The number of instalments can be customised based on your needs.

  • Once your payment plan has been finalised and approved, the premium funder will pay the entire premium amount 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. There is also no need to complete additional applications at renewal each year. Your contract can be easily rolled over to the next period of insurance.



Contact your Whitbread insurance adviser to find out how your business can benefit by using Premium Funding:

P | 1300 424 627
E | info@whitbread.com.au


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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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