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Finance Formulas / July 17, 2018 / Cecelia Weiss

What does the debt service coverage ratio mean? A DSCR greater than 1.0 means there is sufficient cash flow to cover debt service. A DSCR below 1.0 indicates there is not enough cash flow to cover debt service. However, just because a DSCR of 1.0 is sufficient to cover debt service does not mean it’s all that’s required.

In return for your lump sum, the insurance company promises to make regular payments to you (or to a payee you specify) for the chosen length of time most commonly for the remainder of your life, however long that may be.

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