There Is Still Time To Form A CIC And Save Up To $500,000 In 2013
Fall is upon us, and CIC Services is hard at work setting up captive insurance companies (CICs) for clients. This season has been brisk, and, based on applications in process, we expect to grow the number of captive insurance companies under management by 20 percent.
It takes approximately two months to fully form a captive insurance company. Many of our clients who have decided to improve their risk management by owning their own insurance company are pressing to have their CIC formed this year so that they can pay premiums to their CIC in 2013.
Insurance premiums paid to CICs in 2013 are tax deductible, and clients we are serving will reduce 2013 taxable income by $400,000 to $1.2 million.
The clock is ticking, but it’s still not too late to choose to own your own insurance company in 2013. The CIC Services Risk Management Team has established a preliminary deadline of November 1, 2013 for the establishment of CICs that will be operational and prepared to issue policies and collect premiums in 2013.
What Are The Advantages Of Owning An Insurance Company?
A captive insurance company is a powerful financial and risk management vehicle. Owning a CIC provides improved risk management to a business, related businesses or a professional practice. A CIC is also a powerful asset protection vehicle as assets in a well- structured CIC are inaccessible to creditors.
Successful insurance companies accumulate significant reserves to insure the risks for which they issue policies. Business owners who own their own insurance companies are better positioned to accumulate and protect significant wealth for the future.
In addition to insuring risks for its customers, one of the primary objectives of any insurance company is to build up significant reserves for the future. And, insurance companies enjoy many tax advantages as they accumulate reserves. Captive insurance companies are no different. When a business owner sets up a captive insurance company to formally insure risk, he or she also benefits by being able to accumulate wealth in a more tax efficient vehicle. Parent companies pay tax deductible premiums to their captive insurance companies. And, premiums paid to a “small” insurance company making an 831 (b) election are taxed at 0%. “Small” insurance company is defined as collecting annual premiums of $1.2 million or less. The result is a remarkably efficient vehicle to accumulate wealth for the future.
CIC Services, LLC has been helping business owners and professionals own their own insurance company since 2005.