A captive insurance plan can be an extremely valuable tool for business owners. Below are just a few of the many benefits that can be realized.
- Get coverage for uninsurable business casualty risks
- Get coverage for holes in current business casualty policies (deductibles, etc.)
- Create reserves and increase your ability to fund own expansion and at same time qualify for larger loans from banks and financial institutions
- Premiums are 100% tax deductible to business
- Move assets from high tax (highest marginable bracket) to low tax environment (15% federal plus state on first $50,000 of investment income, with ability to reduce through proper tax planning)
- Owe just capital gains on exit, with ability to reduce through proper estate planning
- Option to mitigate ongoing taxes and create lifetime income stream through special arrangement with Security Benefit
- Contribute $100,000 to $2.2MM annually.
- Rule of thumb: premiums up to 10% gross revenue (possibly higher with warranty risk coverage) depending on business risks that can be covered.