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Captive Insurance For Beginners

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					There is a way to reduce taxes and expenditures that is little known,
even amongst many high flyers. It is called captive insurance and
involves sharing or creating an insurance firm to cover your business
group. Since almost 80 percent of companies in the Fortune 500 are doing
this to save money, it makes perfect sense that you should at least have
some knowledge of what captive insurance is. Not only can it save money
but it can also help out when companies find outside insurance too
expensive or the kind of coverage they desire is simply not available.A
captive option is first set up by the parent insurance company that
provides a self finance option to purchase coverage. With a "normal"
insurance program, money is spent on both insurance and service, but with
captive insurance money is essentially invested, with a good chance of
getting it back. Think of it simply as a form of self insurance.Of
course, the firm has to make sure the money is paid in the form of
premiums, in this way it is exactly the same as taking out insurance with
another company. Where savings can be made is that most of the time
captive firms are found in areas where taxes and government regulations
aren't quite as severe. Many offshore centres have large captive markets
and it is through the use of these that most savings can be made. This is
how big businesses have flourished for ages, and now smaller companies
can take advantage of this type of practice also. Most of the smaller
entities can lower their insurance premiums and also get a tax deduction
as well. There is also the possibility to rent a captive in lieu of
ownership, something which is obviously more appealing to the smaller
business.Renting has the advantage of offering tax breaks and unlike a
single parent captive, will meet the required standards of the industry.
Without having to pay for additional expenses such as licensing and
administrative fees, small companies should strongly consider renting.
Every business owes it to itself and its owners to be as tax efficient as
possible and this will most assuredly help come tax season.Although
complex in nature it is fairly easy to set up a captive insurance firm,
there are many huge provider firms available who can guide you through
the whole process. Many of these providers are actually multi-nationals
so no matter where you operate there is a usually a captive insurance
provider available to you.

				
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