The Ins & Outs of Insurance Premium Funding
When it comes to protecting you and your assets, insurance is a no brainer and in most cases from a lender’s perspective, non-negotiable. Learn how Insurance Premium Funding (IPF) can benefit you and your business.
Asset insurance is a risk management strategy. It reduces the financial impact or loss to your business if your assets are damaged, written off, or stolen. Depending on which cover you have in place, you can be protected against costs relating to repair or replacement of equipment as well as lost income from downtime as a result of the equipment loss or failure.
Protecting your assets with insurance typically comes at a high price. This can dent your cash flow. IPF is a flexible solution which protects your cash flow. IPF allows you to pay your premiums on a monthly basis even if your insurance company does not offer monthly repayments.
How it Works
In the lead up to your insurance premium due date, your insurance provider or broker will send you policy renewal invoice/s. Once you have provided these to your broker at Magnolia Lane, they will send you quotes for 6-12 month loan terms, depending on your needs. After you have accepted one of the quotes, we will provide a contract from the lender for you to sign.
At settlement, the IPF lender will pay the premium/s on your behalf. You will then commence paying monthly instalments back to them for the stipulated loan term.
The process from application to settlement is fast and efficient. Even better, we manage it on your behalf every step of the way.
Benefits of IPF
There are a number of benefits of IPF. The most obvious is the preservation of cash flow. Insurance premiums can be quite expensive, particularly if you have a number of policies to cover your fleet. With IPF, rather than paying a lump sum and eating into your cash flow, you can break your premiums down into much smaller, more manageable monthly repayments. This frees up cash that you can invest back into your business.
If you do have several policies, it may be confusing to keep track of which ones you have and have not paid. IPF allows you to manage and pay multiple policies in one monthly instalment saving you time and confusion. With fixed interest rates and terms, you can be confident knowing what your repayments are and when they will be due.
Both the premium and interest payable may be allowable business expense deductions come tax time, making IPF a tax effective option.
If you have existing equipment finance loans with Magnolia Lane and choose us for your IPF, you have the added benefit of housing all your finance under the one roof. This means that when you need a policy added or cancelled off your IPF loan, you need a payout on your equipment finance loan, or you have misplaced your loan documents, you just have to think of one name, Magnolia Lane. We are your dedicated point of contact. We exist to alleviate confusion and reduce the frustration of post-settlement contract administration.
Need to Cancel or Add a Policy?
If you have let go of an asset for one reason or another and no longer require cover for it, your insurance company will process any applicable refund to the lender. The lender will then pass this onto you, pending any outstanding payments. If you have multiple policies on the same IPF contract, the lender will recalculate your repayments, taking out the policy which has been cancelled.
Likewise, if you acquire new assets throughout the loan term you could be eligible to add these to the loan. Bear in mind that repayments would be adjusted accordingly.
Applying for IPF