What Is a Captive?

Captive Insurance Overview

A Captive Insurance Company or “Captive” is an insurance company owned or controlled by the high net worth individual which provides insurance in a number of areas to protect self or any entities owned by that person.

Captives have been around for decades but were not popular until Congress enacted favorable rulings to incentivize companies to purchase needed coverage through the self-insurance arrangement provided by a Captive Insurance Company.

Because of these provisions, A Captive Insurance Company is a powerful tool that provides not only a specific insurance purpose, but also multiple benefits for corporations and/or high net worth individuals such as company executives, professional athletes and successful small business owners.

What is the Purpose?

There are two primary purposes.

01

Captives insure the individual and business entities from risks that are currently covered by 3rd party Insurance Companies that can be supplemented, better served or better priced by insuring through a Captive.

 

Example

Insurance for loss of income due to injury or business litigation risk.

02

Captives insure the individual or their entities from risks that are currently self-insured or not insured at all. Some risks are obscure or too expensive to insure, but can be devastating if the incident occurs.

 

Example

Insurance for terrorism, kidnapping, defamation, etc.

What are the Benefits?

In addition to insurance, the following benefits make Captives a powerful tool.

 

  1. Asset Protection
  2. Risk Retention
  3. Flexible Investment Vehicle
  4. Tax Benefits
  5. Estate Planning Tool

The client can protect their assets and build wealth to ensure their future.

The client can even pass on the benefits of this program to their loved ones.