Closing Proceedures In Premium Financing

The closing process for a premium financed insurance policy can be expedited smoothly and with little stress by opening the lines of communication with the closing manager of the Broker. Generally, the steps to follow in the closing process are similar to most lenders offering financing for clients. The agent, representing the client in this matter, can speed up the process by providing the necessary documents to the Broker in a timely manner.

Steps to Closing:

1. Agent is required to have the client sign a Term Sheet, the basic information concerning the general terms and conditions of the loan approved by a lender and agreed to by the insured.
2. Agent is required to have the client complete and sign a Trust Questionnaire. This is the basis for the establishment of an irrevocable trust that includes the names of beneficiaries, etc. This irrevocable trust will become the owner and beneficiary of the insurance policy that is to be funded by the lender. Items number one and two must be submitted to the broker for processing.
3. Agent is required to work with the client to accurately complete the insurance carrier application and illustration, approved by the lender, and signed by the client as the insured and not owner. In addition, the agent must provide a photo ID of the client along with another form of identification and return to the Broker for processing.
4. Lender will provide the broker/agent with an Irrevocable Trust document, based on the information provided by the client, along with Loan Documents that detail the financing of the policy that is being sought. Both the signed and notarized Trust and Loan Documents will be returned to the Broker for processing.
5. Once the trust is established, the trustee will sign the carrier application as owner and return the application and illustration to the Broker. The agent will submit this to a GA for carrier submission and approval.
6. Once a policy is approved and issued by the insurance carrier, the policy along with agent and insured signed Delivery Requirements will be sent to the Broker for processing.
7. Upon review and approval of all documents by the trustee and lender’s attorney, the lender will then fund the policy via wire transfer directly to the insurance carrier. This process could take up to one week once the policy and requirements are received by the trustee.

It is not uncommon for questions to arise regarding trust and loan documents during this process. As a Broker, we are there to be a resource and an advocate on behalf of the agent’s client with the lender if the need arises. We urge all of the agents to have their clients represented by counsel and to have all documents provided reviewed in a timely manner. We also urge the agents make sure that they are licensed in the proper state for the carrier application. This recommendation is based on the fact that the owner trust is usually domiciled in a state different from the insured’s residence.

If you have further questions or comments on closing procedures or premium finance, please contact Finance For Life at 877-763-0098