Every business needs insurance and every business needs to manage its working capital and cash flow. Insurance premium funding (IPF) allows you to repay your annual insurance premiums in monthly instalments, rather than in a single lump sum, allowing your working capital to remain in your business working for you.
What are the benefits of IPF?
With insurance premium funding you can enjoy the following benefits:
- Flexible payments on your annual insurance premium
- Keep working capital in your business
- Ability to potentially afford extensive insurance cover
- No additional security required as the insurance policy acts as security
- Qualify for an early payment discount on your annual insurance premium
A healthy cash reserve is very important to small-to-medium businesses (SMB). Poor cash flow can prevent businesses from growing and by protecting your working capital and offering flexible payment options, IPF helps you to stay on top of your cash flow.
How does it work?
The first step is to contact your broker and let them know that you’re interested in an IPF solution. Your broker will contact the market, find the best option for your business and help you decide which to choose.
The end result? You’ve got the right policy, at the right price, with the right repayment options. Your working capital remains intact, and your cash flow is more predictable.
Does IPF affect my insurance claims?
Absolutely not. Your insurer receives the entire cost of your policy up front from your IPF provider. That means that your policy has been paid in full, and you are entitled to make insurance claims as normal.
What happens if I miss an IPF payment?
This largely depends on the terms of your agreement with your IPF provider. IPF providers will try and work with their clients to find a solution to avoid the cancellation of their insurance policy.
At worst, your IPF provider may choose to cancel your insurance policy if you fall behind on your monthly payments, leaving you without insurance. You will be liable for any outstanding payments based on the type of insurance policy you had. For non-cancellable insurance policies, you will need to repay the full balance of the remaining amount to the IPF provider, where for cancellable policies the IPF provider will retain a return premium.
You should contact their IPF provider as soon as they are aware that they might not be able to make their monthly payments.
Contact the lending advisors at Partners Wealth Group today on 1800 333 143 to see how we can help with your IFP needs, or advice on whether it is the right option for you.