Glossary
Premium Finance
A lending arrangement in which a third party pays a policy's premium up front and the insured repays it in instalments with interest.
Premium finance lets an insured spread a large annual premium over monthly payments while the carrier is paid in full immediately. Commercial accounts use it routinely for policies too large to pay at once.
The agency's receivable is settled by the finance company rather than the client, which changes the reconciliation picture: the deposit arrives from a third party, in a single lump covering multiple policies, and cancellation triggers a return of unearned premium to the lender rather than the insured.
See also
- Installment Plan — A carrier-offered schedule allowing an insured to pay premium in periodic instalments rather than in a single payment.
- Down Payment — The initial payment an insured makes to put a policy in force, with the balance paid through instalments or premium fina…
- Return Premium — Premium refunded to an insured when a policy is cancelled mid-term or an endorsement reduces the exposure.