Premium financing is a process wherein the permanent life
insurance policy premiums are being paid by some of the third parties or
third party lenders and it is an excellent marketing idea. In other
words it can also be put forward as premium financing is a process which
aims to increase your insurance needs by the method of financing the
insurance. Thus premium financing enables individuals, business firms
and the large companies to purchase the insurance without having to sell
or lock up the various assets.
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| Premium Financing |
The working of the premium
financing works in the following way consider for example you are owning
an insurance policy worth X amount of dollars and you can use the value
of your insurance policy as a mode of collateral security which will
enable you to finance other insurance policies. Thus in this way premium
financing allows you with a wide range of insurance options open to
you. There is no doubt that premium financing is very much cost
effective. It is a very favorable financing option as you can secure a
huge loan amount against the life insurance policy. It is quite
important to understand that you are going to get a much better option
or in other words you will get much better rate of interest and the term
of loan for the secured and the unsecured financing.
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| life insurance policy premiums |
However it
is important that before getting a premium financing option you need to
have a look at your financial needs and get proper advice before you go
on with a financing option. There is this one question which many people
have as to will it be required for them to purchase a new insurance
policy or can they get the service of premium financing on their
existing insurance policies. Well the answer to this simple question
would be that at the time the practice of premium financing came into
existence it was a requirement that you will have to purchase new
insurance policies, but now this is not the case as you can get this
option of premium financing on your existing insurance policy and there
is no requirement for you to take the strain of going for a new
insurance policy. This will again provide you with a very much better
option that would not ask for your valuable possessions to be given as
collateral security.
Some other people who really take the benefit
of premium financing are the wealthy investors or the business owners.
It is an extremely good option for the companies that do not want to tie
up their assets to purchase the large amount of insurance policies. It
is also a technique which is offered for the employees to be offered as a
part of their wages. It allows the firms to attract new employees and
help them retain their valuable employees. Premium financing is also
used as a technique for estate planning, company expansion, attracting
new employees and retaining their valuable employees.