Captive Insure

The tax code says self-insuring risk is not deductible

1986 congress introduced 831B – farmers were ensuring their crops. This began this concept.

Below are some notes were taken on this subject:

  • Additive to regular insurance
  • Not malpractice insurance
  • Insure your brand with pre-tax dollars
  • Eligible yearly premium – 10% of gross billing from the previous year
  • Use a C-Corp
  • Why? Self-insure against low probability intangible events within your business
  • Business expense
  • Lowers your taxable income
  • Very similar to banking from yourself
  • Used to pay out for warranties for your products – use for a marketing tool for your business
  • You can leave the money in the program (insurance), borrow the money paying yourself insurance, declare a dividend
  • Congress has increased (2015 Path act) 831B to $2M with inflation rider and got rid of lineal descendants
  • Previously a red flag for tax auditing
  • Fortune 500 companies always have insurance company offshore, try to do in USA with yours
  • To ensure brand issues such a stupid comment on social media NOT incase your key employee leaves