Insurance Premium Finance

Orchard Funding | Insurance Premium Finance Professional

As we all know that life is unpredictable, you never know what will happen in the next moment. So it is always advisable to have a premium insurance plan for your business, family, and loved ones. It can help you in both business and personal life.

The insurance premium financing goal is to relieve the financial burden that business owners when getting insurance policies. A well-structured insurance program will also help to grow and develop the business financially. Lets us know about insurance premium finance first.

Premium Insurances are fruitful in the long run and can help you during crisis or loss! While we talked about Insurance Premium Finance, what does this term mean in the real sense, and how can we make full benefit out of this?

What is insurance premium finance?

The payment that a policyholder agrees to pay to the insurance company is called an insurance premium. The policyholder registers into a contract with the insurance company. The insurance company assures to cover the loss by repaying money in any case of any loss or damage. The policyholder pays monthly premium payments to the insurance company.

Insurance Premium Finance


An insurance company will consider the following factors when determining the price of a premium:

  •  how likely an accident or loss is?
  •  the likelihood of a claim 
  • How much the company is going to pay out if a claim should manifest.

 Insurance companies also give options to policyholders to choose from ranging amounts of coverage based on their requirements and budget.

There are different types of premium financing arrangements that we can choose according to our requirements.

  • Premium-only financing 

The individual borrows only premiums for insurance and then pays some interest rate on that.

  • Premium and interest financing 

The individual borrows both premiums and interest on the loan with no annual cost.

  • Partial premium and interest financing 

The individual borrows some premiums or some interest for some time.

Benefits of Insurance Premium Financing

  • It is an effective option for businesses that want to fund their insurance premiums instead of paying with cash. 
  • Suitable strategy for companies that own multiple insurance policies from different carriers. 
  • A better option for lower-cost funding.

Insurance Finance or Premium Insurance Financing refers to lending your funds to a person or an organization to cover their Insurance Premium cost. In layman terms, it refers to the amount of money an insurance holder agrees to pay to the insurance-providing organization.

Now that you are familiar with the topic, you must wonder what an insurance premium cost refers? And why do a person will require one?

Insurance Premium is a form or type of protection from financial loss/crisis. It is a form of risk management used to hedge against a contingent or uncertain loss.

The amount paid during regular intervals as per the contract for insurance premium refers to Insurance Premium cost.

Why do People consider premium financing for life insurance?

There are two main reasons why people borrow money to pay life insurance premiums. 

1. Liquidity:
Believe it or not, many people have too many assets but no cash available to pay their premiums. They can easily borrow money from a recognized lender on behalf of assets.
2. Earn more in existing investments:

Sometimes borrower believes that in existing investment more money can be earned. Let’s say annual investments give 8% returns, and the cost to borrow is 4%, then borrowing is beneficial for the long run.

Risks To Borrowers

Borrowing money to pay life insurance premiums is also a risky strategy. There are the following problems that can occur:

  • Increase in interest rate over the time
  • The policy can’t meet individual expectations.
  • The requirement arises for additional funding.
  • The lender decides not to renew the loan.

There are two types of Life Insurance Premium Financing:

  1. Traditional” Recourse Premium Finance

2) Non-Recourse Premium Finance & Hybrid Premium Finance

Now that you are well aware of the terms, insurance premium, premium finances, and Insurance Premium cost, you all must think about why we need one?

There are several benefits of having Insurance Premium Financing:

  • It eliminates the need for a large up-front payment to an insurance organization.
  • Multiple insurance policies are attached to a single insurance premium contract, allowing for a single payment plan to cover all insurance coverage and making it easier for you to pay.
  • It allows the clients to get the needed coverage fund without liquidating their other assets.
  • The main benefit of premium financing is avoiding the opportunity cost of paying out of pocket. In addition, clients can retain a significant amount of fortune known as retained capital by having the leverage to use other people’s money.
  • It is an effective and reliable solution for businesses looking to fund their insurance premiums instead of paying with cash.
  • It is a suitable strategy option for companies having multiple insurance policies.


Insurance premium financing may be beneficial for some businesses. If interest rates are low, then we can consider it for the long term. But if the interest rates are high, then it can also result in financial loss.

Before deciding insurance premium financing is the right solution, we can check factors like cash flow n policy, interest rate, terms and policies, and tax saving options.

A business owner should never decide without consulting an insurance professional. Now you must be confused about what agency you should consider Premium for your family.

Why Choose Orchard Funding Ltd?

We at Orchard Funding Ltd have professional business managers with over 45 years of experience combined in accounting and insurance premium finance. We are experts in the services and provide all the required assistance that you need regarding financing.

Orchard Funding has experience in business consultants at the Business Benefits Group who can provide guidance. To learn more about insurance premium financing or what it requires, reach out to Orchard funding Ltd today.

Since now you are well aware of Premium Insurance Funding and various technical terms associated with it. Get in touch for the first free financial advice. For more information, you can contact us directly or visit our website to learn more. Read also RWS UK No Fees

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About Orchardfundingltd

Orchard Funding has a specialist team of Business Managers with a combined 45 years of experience in the accounting, insurance premium financing, and Fee Funding sector available to meet with you at any time to discuss. Fully online application process, fast and simple solutions for funding. We are proud of our heritage and as parents who use the independent sector, we are confident you will find our product of great value.

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