Captive Insurance Company
What is a Captive Insurance Company. How do CICs work, and why are they so useful?
What is a CIC
CICs are ideal for professionals or private businesses to protect their assets. Through a CIC, you can place your shares in a second entity such as an irrevocable trust. The CIC is perhaps the most efficient vehicle for compounding leverage and achieving financial goals.
Advantages of CICs
Why create a CIC? As Jarvis and Mandell note, a CIC offers the following benefits:
Superior risk management for the business – CICs are an excellent way to transfer risk and protect assets.
Reduction in the business’s insurance expenses to third-party insurers.
Ability to capture profits on insurance business.
Creation of a potential buyout mechanism for the owners of the business upon retirement.
High level of asset protection for assets under the CIC.
Superior income tax treatment for CIC income, assuming that you properly structure and maintain the CIC.
Significant estate planning benefits when the CIC is properly integrated with estate planning tools.