We’re not going to lie to you, insurance can get expensive.  Many industries find that public liability is the most expensive, others find that it can be products they sell, whilst strata property insurance can also get expensive, particularly if you are dealing with multi-million dollar properties.  Forking out the big bucks up front can seriously cut into your cash-flow.  And this is exactly where premium funding comes in to help.

What is premium funding?

A premium is the payment you make for your insurance.  Hence, insurance premium funding is when you receive help with making this up-front payment.  The fund pays for it on your behalf, and you are then enabled to spread out the costs of that premium over a year, paying back in regular instalments instead.

Premium funding is very popular with businesses across different industries, especially those with high premium outlays for their insurance.  It can help to loosen the financial strain on any business, big or small and free up that all important cash-flow. By eliminating the need to pay up-front, you are opening your business up to more financial opportunities.

What are the benefits to premium funding?

Premium funding acts as a convenient cash flow solution.  You can avoid the initial outlay that comes with premiums for strata properties.  Added benefits include:

  • Flexibility – You can generally choose how often you would like to pay, monthly, quarterly, or perhaps every 6 months, at a small interest charge.  Payment options can also generally be tailored such as direct debit, just ask a specialist broker.
  • Meet your financial needs – By having the premium paid for, the financial burden is lifted and you are able to put the money wherever you need to.  Your yearly premium will be paid for in full on your behalf, and then all you have to do is meet the monthly instalments.
  • Free up capital – Open yourself up to other investment opportunities where working capital can make you more profit and generate a greater income. You might have plans to finance other planned works or investments. 
  • Preserve your reserves – Property investment can erode your reserve funds, making then unavailable for further investment. Premium funding preserves your back up cash in case you do need to utilise it. 
  • Keep it simple and separate – Premium funding is not through your bank so you don’t have to worry about overdrafts or the service interfering with existing financial arrangements
  • Multi-use – You can use premium funding for more than one policy at a time
  • Tax deductible – Still not convinced? Premium funding is tax deductable in most cases.  Confirm with your accountant for more details as this is general advice only.

Premium funding extends to most types of commercial and strata insurance policies. It is a very flexible and convenient way to manage your larger insurance fees. At Challenge Insurance Services we have access to some of the best premium funders available.  You will in turn be able to fund your strata insurance in the most effective way possible and put your spare cash where it can return you more.  After all, that is what property investment is all about. We look forward to hearing from you soon.