I’ve got a question for you…
Are you an independent business owner looking to increase profits while maintaining greater control over your own risk management and tax planning? A captive insurance company might just be the best option for you. But first, it is important to understand the fundamental basics of this avenue––a quick Captive Insurance 101, if you will. Here are the facts you should know about captive insurance best practices before making your next move.
What is a captive insurance company?
Quite simply, a captive insurance company is a risk-financing tool––one that grants owners greater control (in both financial and risk management sectors) than that which is offered by traditional commercial insurance. Captive insurance involves setting up your own insurance company, to assert greater control over your risk management, tax planning, and overall earnings. With a captive insurance structure, you can make sure that your risks are written into policies as you see fit––without ambiguous or obscure wording, or using terms which strongly benefit your insurer at claims time.
Why form a captive insurance company?
For years, large corporations have benefited from operating their own privately held captive insurance companies––most of which were originally established to provide coverage where insurance was unavailable or prohibitively priced. Such insurance subsidiaries were typically held in offshore accounts (you’ve no doubt heard about the tax benefits of keeping funds in the Cayman Islands).
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