Tag Archives: insurance

4 Financial Benefits of Captives

Captive insurance companies are created and controlled by the businesses they insure. This self-insurance is used to mitigate risks that cannot be or are difficult to insure, including product liability, litigation fees and malpractice. Any of the claims made against these businesses for their covered risks are paid by the captive, protecting corporate assets.

Tax Benefits

Captive insurance, including group captive insurance, has several tax benefits. For example, company premiums are not considered taxable income for the captive, but it is also a tax-deductible expense for the parent company. In addition, as the captive’s assets increase, they can be distributed to the company’s owners as dividends, which have a significantly lower tax rate than income.

Cost Reduction

Not only do companies accumulate (and protect) assets through captives, but they also reduce their costs. They have reduced operating and administrative costs for the captive. In addition, companies are able to tailor their coverage, so they are not paying for coverage they do not need. They determine their deductibles and incentives for loss control. Finally, they gain access to the reinsurance markets, which would have been unavailable without the creation of the captive.

Risk Reduction

Not only do captives provide policies that protect the company, but the underwriting process identifies corporate risks and their probabilities. This allows companies to create new processes that improve safety and reduce risk. As businesses focus on risk management, they reduce their premiums. This focus may then spread to other areas of the business, improving safety and risk  throughout the entire company.  

New Income Stream

Because captives are businesses, any company that starts a captive is actually starting a new business and entering a new industry. This process distributes corporate risk among industries. In addition, as they grow, captives can become full insurance companies, offering insurance services to clients outside the parent company and creating a new revenue stream.

Because of the capital investment requirement of captives, consider researching all your captive options prior to investing.

Importance of Errors and Omissions Insurance Cover

What is this? errors and omissions insurance is the type of insurance cover that professionals take to cover against mistakes that may cause financial harm to another party. This is the kind of insurance cover that an insurance broker or a freelance accountant would take. Such errors as they would make could prove to be very costly to their clients and a lawsuit would definitely follow. This kind of cover will insulate one from facing the cost of the lawsuits that would be sure to follow the professional mistakes. It is taken separately, from the more common general insurance covers for business. This cover takes care of a professional liability claim against a company.

Our Children, Our Blessing

We consider our children the best gifts that we have ever received and as much as we can, we provide for them to the best of our abilities and give them the best of all things, or at least, the best that our hard-earned money can afford us, food, toys, clothes, books, education, to name a few. If we could we would not let even a tiny, unsuspecting insect to harm them and would go the extra miles to safeguard their well-being and safety. And if truth be told, this early, you have been asking around about term insurance and educational plans and thinking of getting one for your precious little one. Of course, you would not want to put anything to chance and would simply stop at nothing to be sure your little one is getting the finest.