We speak to many groups of business owners and professionals about Asset
Protection and tax-favored wealth planning, and we are often asked about
captive insurance companies. ‘Captives’ or tax-exempt closely
held insurance companies (CICs) are useful for not only asset protection,
but also for insurance premium savings and tax planning – provided
they are suited to your economic needs, and you qualify for their considerable
The CIC is a legitimate insurance company. It is licensed to write insurance
in the U.S. and registered with the IRS. Many Fortune 500 companies have
long used CICs to protect their excess cash, to gain tax advantages, and
to lower their own insurance costs. Now individuals, smaller business
owners, and professionals also take advantage of CICs by setting up their own.
By owning your own CIC, you can insure all or a portion of your business
or professional practice from significant risks – such as malpractice
or other liabilities or losses for which you would typically carry insurance.
By insuring yourself through your own CIC, you get a present year tax
deduction on the premiums and you can pay any claims with pre-tax dollars
out of the CIC’s loss reserves. Your CIC can also insure low liability
risks, or your CIC can transfer risk to another reinsurer. Whether you
own a CIC or you are a member of a group you can take a significant deduction
each year and grow your funds in the CIC tax-free. You can later reclaim
the funds and pay long-term capital gains tax. This three-tier tax advantage
is unavailable through pensions, IRAs or other retirement plans.
In addition to its tax benefits, the CIC offers Asset Protection. Your
CIC can supplement your existing liability policy. This ‘excess’
malpractice protection also gives you the security that you won’t
be wiped out by a lawsuit in excess of your present coverage. Also, the
pre-tax premiums paid to your own CIC are protected from the creditors
of your business or professional practice. You accomplish all this without
losing control of your funds.
To speak with an attorney about setting up a CIC and if it would be a good
fit for your business contact us today. The Presser Law Firm, P.A. offers
complimentary preliminary consultations directly with one of our experienced
Asset Protection attorneys who will review the details of your situation
and offer you specific relatable advice on how to best protect your assets
in general and through a captive insurance company.
The Presser Law Firm, P.A.
6199 N. Federal Highway, Boca Raton FL 33487
(561) 953-1050 or e-mail Info@AssetProtectionAttorneys.com
For additional information, watch this
webinar replay on Captive Insurance Companies