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Premium Financing

Premium Financing allows you to enjoy the return of the carry margin without having to make any payments or even incurring any additional monthly payments

What is Premium Financing?

Premium Financing means buying the policy and mortgage the policy to the bank at the same time. The buyer only needs to pay the "down payment" to buy the whole policy. The concept is simply the same as buying a house. Assuming that you buy a floor of 8 million, the buyer only needs to pay 2.4 million for the down payment, and the remaining 5.6 million can be met with the bank (mortgage loan), and you can buy a value of 4 million. 's property.

The principle of premium financing is the same. If you buy a policy with a premium of 3 million yuan, you only need to prepare the first installment of 1 million yuan. After the relevant bank approves the loan amount (in this example, 2 million yuan), you can buy the policy.

Where Premium Financing Attracts (Low/Controlled Risk, High Return)

Premium financing is an arbitrage game. Suppose your borrowing cost is 2%. To invest in a relatively low-risk tool, such as a dividend-paying stock that pays 4%, you will earn 2% of the difference in interest. . The following is the tvb financial perspective report in July 2021 Scenario A: Assuming a principal of $1.4 million, an average return of 4.3% per annum, and a policy value of $2 million after ten years. (First you have $1.4 million in cash Scenario B: Suppose the principal is 400,000, and then the mortgage policy is loaned to 1 million. After ten years, the policy value is also 2 million, and the average annual return is 9.3%

Benefits of Premium Financing

Premium Financing allows you to enjoy the return of the carry margin without having to make any payments or even incurring any additional monthly payments
Low risk

Savings insurance is a low-risk investment tool, which guarantees growth in addition to capital preservation, compared to single investment in stocks, funds or other high-risk investment tools such as CBBCs, warrants, options

Low cost

Taking the July 2021 tvb financial perspective report as an example, for the same return of $2 million, the capital required for premium financing is 400,000, and the capital without premium financing is $1.4 million, a full difference of one million (71 %)

High return

The average return of premium financing is 9-12%. In terms of low-risk investment tools, this set of investment tools brings very high returns (the US S&P return was about 8% in the past, and the Hong Kong CLP stock distribution was about 8%. The interest rate is 4% as a reference)

Who is suitable for premium financing?

Those who can get low-interest loans (such as personal virtual banks): virtual banks such as ZA Bank offer interest loans below 2%, Click here to learn more With self-occupied/rental properties: Premium financing can be used flexibly to achieve the following effects:
  1. Reduced mortgage
  2. If you want to pay for the property, do not use the property for the property (immediate pay off)
  3. Rent for own occupied property
  4. Double the rent for rental properties
  5. Additional emergency funds
  6. Free floor change
Real example: Case Sharing

Risks of Premium Financing

Premium financing is another "interest spread" arbitrage product that has provided investors in a low interest rate environment in recent years. If interest rates are expected to be low, and the investment period is acceptable to be about 7-10 years, the premiums Financing is indeed one of the investments worth considering in your portfolio

Is it a new investment tool?

In fact, the concept of premium financing existed 20 years ago, but the threshold was relatively high 20 years ago, and Yijia has become popularized as long as you have HK$500,000 in cash, you can achieve premium financingPremium Financing


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