A 831(b) Captive Insurance company is owned by your business and provides legitimate insurance coverage for risks that may not be adequately covered by traditional insurance.
How It Works:
- Your business pays premiums (up to $2.9M/year) to your captive for legitimate risks
- Premiums are 100% tax-deductible to your operating company
- Captive grows tax-free for 10+ years
- Distributions taxed at capital gains rates (20% vs. 37-50% ordinary income)
Key Benefits:
- Massive tax deferral ($100K-$500K annually)
- Asset protection (captive assets protected from operating company creditors)
- Customized insurance coverage for unique risks
- Wealth transfer vehicle for next generation
Ideal For
- Business owners with $1M+ in taxable income
- High-risk industries (medical, construction, manufacturing)
- Owners seeking asset protection + tax deferral
Requirements
- Legitimate insurable risks
- Proper actuarial study
- Arms-length transactions
- IRS compliance (IRC Section 831(b))
