Multi-pay premium finance allows the cost of buying a life insurance policy to be spread over a period of time. For example, a life policy purchase may be paid for through a series of regular premiums over 5, 10, 15 years or even longer.

By not paying all of the premium up front, it allows a policy purchaser to use the capital that would have been invested in a single up front premium to be used for other investments. From a cash flow perspective, it also helps the life policy buyer to plan their personal or business cash flow payments more easily.

However, multi-paying a life insurance policy comes with an additional cost which is determined by the insurer at the start of the policy. The cost is usually in the form of a higher overall premium being charged by the insurer, which varies depending upon the length of multi-payments selected.

• Low up front cost to buy a life policy.
• Higher life cover can be afforded by spreading the cost of buying a life policy across multiple payments.
• Cash saved by not paying a single premium upfront can remain invested with the aim of growing that money more quickly than the higher cost of paying a single premium.
• No further premium payments are required if the life insured dies during the regular premium period.

• Higher overall cost than paying a single premium for a life insurance policy up front.
• Increased chance a life policy lapses when a policy owner is required to pay premiums over a number of years. If a policy lapses, the life insured may lose the cover and no death benefit is payable.