important Benefits Of Insurance Premium Financing

Benefits Of Insurance Premium Financing

What is Insurance Premium Financing?

Insurance Premium Financing is a loan short term that is offered to individuals who are in need of urgent payment for insurance of their vehicle. This loan is given to individuals who are unable to pay for insurance at once. A financial institution such as Mwananchi Credit comes in handy to pay for the premium then the individual pays back the money in specified monthly instalments based on the terms and conditions agreed upon.

Mwananchi Credit LTD Insurance premium financing is designed to fund the insurance premiums subscribed by its customers. In most cases, premium financing is payable with 10 months. 

Purpose of Insurance Premium Financing

The purpose of Insurance Premium financing is to break down a single payment into smaller manageable instalments for an individual through funding from an external financial institution. This in turn gives the individual an opportunity to invest in other income-generating activities such as investments.

Types of Insurance Premium Financing.

There are two main types of Insurance Premium Financing Personal insurance premium financing and commercial insurance premium financing.

  • Personal insurance premium financing covers insurance premiums acquired by an individual.
  • On the other hand, commercial insurance premium financing deals with insurance premiums for business entities and organizations.

Insurance Premium Financing Rates.

Premium financing at Mwananchi Credit ranges between a minimum of KES 50,000 and a maximum of KES 5,000,000. The amount applied is payable in instalments of 3 -10 months plus an interest rate of 1.667 per month.

Factors to Consideration Before Applying For Insurance Premium Financing.

  • Have you completed the Insurance premium finance Loan in line with the standards and procedures outlined?
  • Do you possess a national identification card and a valid KRA Pin?
  • Do you have valid and verified certificates and documents for ownership?
  • Do you have documentation for associations and partnerships between corporate and proprietary entities?
  • Do you possess Bank statements and proof for not having any outstanding debts with other financial institutions?

The Characteristics Of Insurance Premium Finance Loans Are:

  • There are no limitations of the premium loans to be issued, an insurance premium loan can cover up to 90-100% of the cost.
  • Friendly payment schemes whereby payment can be done in instalments of a maximum of 10 months.
  • Payment methods acceptable for paying insurance premium loans are cheques, monthly instalments, direct deposits and mobile banking.
Important Benefits Of Insurance Premium Financing
Important Benefits Of Insurance Premium Financing Insurance Premium Financing

Finally, the benefits that come along with Insurance Premium Finance loans are

  • Provides a manageable and easier way of paying insurance premiums without any pressure and over-stretching of the budget.
  • Insurance premium finance within a business set-up improves the management of cash flow with a business or an institution. Insurance premium finance loans help a business understand clearly the assets and liabilities of a business.
  • Insurance premium finance loans provide the fastest way for individuals and companies to access annual insurance covers offered by different insurance companies across the globe.
  • Insurance premium finance loans offer flexibility in the payment of insurance premiums through these two main ways these are instalments of up to 10 months and the different payment methods that are acceptable for paying the loans.

Frequently Asked Questions (FAQs) about Insurance Premium Financing.

What Are The Payment Methods For Insurance Premiums?

The four main payment methods of insurance premiums are lump sum, a payment method in which an individual pays for the insurance before the coverage begins. Monthly premiums whereby a person decides to pay for insurance every month based on the agreed terms and conditions. Quarterly is a payment method that divides a year into four main quarters, therefore payment is done after every 3months. Finally, a semi-annual method entails paying for an insurance premium twice a year.

What Are The Elements of Insurance Premium Financing?

Insurance premium financing is composed of three main elements: mortality charges, expenses and savings. Mortality charges define the cost to be incurred in the event an individual owning an insurance premium succumbs to death. Then expenses have been broadly categorized into costs for sales and administration. Finally, savings is the element that describes the returns to be gained upon receiving the insurance premium financing.

What Are The Criteria Used For Issuing Insurance Premium Financing?

There are a number of factors that are put into consideration before an individual is issued an insurance premium finance loan. Some of the factors are based on the policies and procedures for the organization while some of the factors are dependent on the individual. Factors considered in an individual include age, lifestyle, family history, account status and opted average.

How Do Insurance Companies Make Money?

Insurance companies make money through the payable premiums given by the company in exchange for insurance cover. Once the company receives the paid premiums from customers the insurance companies invest the money in other assets such as real estate and businesses. The business model applied by insurance companies to generate income is the advertising business model.

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