Definition:
Premium Financing involves the lending of funds to a person or company to cover the cost of an insurance premium. Premium finance loans are often provided by third party finance entity known as a "Premium Financing Company"; however insurance companies and brokerages occasionally provide premium financing services.
To finance a premium, the individual or company requesting insurance must sign a premium finance agreement with the premium finance company. The loan arrangement may last from one year to the life of the policy. The premium finance company then pays the insurance premium and bills the individual or company, usually in monthly installments, for the cost of the loan. ~ wikipedia
What have we seen as questions in the past?
An agent or broker who arranges a loan (refer their client to a finance company) may charge an additional fee for their services.
On the test, fee always implies "disclosure to client in advance."
What does the agent disclose?
a. All commissions and fees
b. All fees for arranging the financing agreement
answer: b.
An agent's commissions are between them and the insurer they represent, it need not be disclosed. "B" is the better answer.
Then, the agent maintains a sales log of this "fee" activity for ___ years for audits and inspections.
answer: 3 (most records are 5 years)
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