Cash Flow Plan
What Does Cash Flow Plan Mean?
A cash flow plan is a plan in which a policyholder uses an existing cash flow stream to finance their insurance premiums. It can also refer to an insurance company’s assessment of its income streams and expenses, along with its plan for keeping its cash flow higher than these expenses.
Insuranceopedia Explains Cash Flow Plan
Cash flow is very important for policyholders and insurance companies alike because it can provide financing for both parties. For policyholders, cash flow can be generated by the policy itself, as commonly occurs with life insurance policies that have investing components. For insurance companies, cash flow is typically generated through premium payments and investments.
Cash flow plans help both policyholders and insurance companies make good use of their cash flow sources.