Updated: Mar 17, 2021
So what is medium-term insurance anyway? Somewhere between short-term and long-term insurance lies medium-term, but what are the benefits and uses of medium-term insurance and how can it be used as an asset to your business?
Medium term insurance is a more specialized type of insurance coverage and is primarily intended for capital equipment sales. In most cases, the coverage period will range from one - five years, with exceptions up to seven years for specific types of capital equipment. More often than not, these policies are written on a single buyer basis. The policies also require some form of down payment with a prearranged payment schedule and are documented with a promissory note. The majority of medium term insurance policies are structured to include a bank as a funding source. Therefore, the ability to understand the banking requirements is critical for these programs to be successful.
With the security of medium term credit insurance, businesses can increase their competitiveness on a global level by offering financing to clients for sales. Other uses include: securing longer-term financing for foreign customers, insuring to protect against nonpayment from international buyers and covering commercial and political risks.
Medium-term insurance also provides for a number of benefits. First, reducing risk and lessening the chance of colossal losses due to the nonpayment of a buyer. Further, medium-term insurance leads to the increase in competitiveness. With offering medium-term insurance, your business is providing clients the opportunity to obtain the credit necessary to take hold of and win international sales. Finally, medium-term insurance increases and improves cash flow for a business. By borrowing against receivables, a business can turn its collateral into greater borrowing power with its lender.
Are you ready to grow and protect your business? Impello Global is a trade finance advisory boutique and trade credit and political risk insurance brokerage, headquartered in Seattle, Washington. We specialize in trade credit and political risk insurance and provide advisory services to companies and lenders who are looking to expand their trade finance capabilities.
If you are a company or a lender trying to better understand trade credit insurance or looking for guidance as to how trade credit insurance can help improve working capital financing, our team would be delighted to learn more about your business and discuss options available to you. Please visit our website at www.impelloglobal.com or contact us directly at firstname.lastname@example.org.