Premium Financing

Premium financing used to be mainly private banking (Private Banking) to provide related services, generally requiring an amount of more than 1 million US dollars. Due to the popularity of the Internet in recent years, the information gap has been greatly reduced, and retail banks have seized the market, making premium financing more popular. Currently, it generally requires more than HK$1 million, which is generally suitable for people with higher assets.

The structure of premium financing involves three parties, including: the policyholder, the insurance company, and the lending bank:

Policyholders <br class="smart"> intending to purchase high cash value life insurance from an insurance company borrow money from a bank to pay most of the premiums, and are responsible for a small portion of the regular loan principal and interest repayments themselves (although most banks only Interest needs to be repaid monthly, and the principal will only be recovered when the policy is cancelled)

Loan banks <br class="smart">Approve large loans to cover most of the premiums through the policyholder's loan application, assessing their repayment ability, proof of assets, proof of income, etc.

The insurance company <br class="smart">approves the documents after receiving the application documents, and then hands over the insurance policy to the lending bank as a mortgage to protect the interests of the bank.
When the policy cancellation notice is received in the future, the surrender amount will be sent to the lending bank first, and the balance after deducting the loan principal will be returned to the policy holder or beneficiary.

Note: A life insurance policy is a product underwritten by an insurance company, while premium financing is a loan service provided by a bank. Insurance companies themselves do not provide premium financing, but some insurance companies that cooperate with banks, based on some of their policy terms and conditions, may consider accepting customers to pledge their policies to banks for premium financing.