The term Premium Financing refers to the lending of money to an individual to cover the cost of insurance premiums. Premium financing services are occasionally provided by the insurance companies and brokerages but are often provided by third party finance companies. After this the premium finance company pays the premium of the insurance and sends the bill to the person or the company. The bill is usually in monthly installments. The loan contract lasts for the life of the insurance coverage. The clients who buy the insurances associate it with their estate planning and hence it is a known fact that they will have material assets. The owners of life insurance policies are trusts which cannot be reversed and other such similar entities. The persons who market life insurance or the clients negotiate financial agreements with the Premium Financing Companies. The facility of considering these lending institutions are that as these companies pay the premium, the assets of an individual or the company, which otherwise would have been used to pay the premium by liquidating those assets can be invested. The funds could also be saved and can be used to invest them elsewhere. The other advantage is that financing helps avoid making gifts to trusts. Financing should be done only for premium purpose; it is not suitable for paying the interests. The premium should be financed but the interests must be paid annually.

Premium financing has a lot of benefits and hence must be taken up to make insurance much easier. Many policies can be attached to a single premium finance contract. This allows for a single payment plan to cover all the insurance coverage.