How does insurance premium financing work
The process of funding is as follows:
• The insurance agent/broker binds a policy for a business and then requests from the business a down payment of 25% of the full policy amount.
• The remaining amount is then financed through Common Cents Capital.
• The policy maker signs a security agreement the assigns power of attorney to Common Cents Capital. This allows us to cancel the policy at any time.
• The policy holder then receives payment coupons that are due thirty days from the initial policy date. Because the policy has been prepaid for a total of 90 days in advance and the first payment is within the first thirty days the policy holder is always paying in advance.
• The process of cancellation begins when the policy holder is fifteen days late. The first item is that the policy holder and the insurance company are notified as to the intent to cancel the policy. The holder has an additional 15 days to pay the past due financed amount.
• If the past due amount is not paid, within the fifteen days, then a cancellation notice is sent to the insurance company and the policy holder. The insurance company then refunds the unearned insurance premium.
Since the policy holder has been prepaying the policy the unearned premium is in excess of the amount that was originally financed. The finance rates vary for each policy the rates vary from a 9.99% to a 12.99% rate depending on the credit worthiness of the policy holders. There is a fee of 2% for the initial setup and management of the policy financing agreement. The historical net returns to the fund have exceeded 10%.