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The Benefit

One clear captive benefit is that it has become user friendly for small and midmarket businesses with layered exposures. For example, 831 Captive's have the innovative ability to facilitate real insurance and wealth transfer. It can be owned by the business owner's dependents or trust. This creates a unique opportunity for small and mid market businesses to develop the skill sets needed to partner with major market accounts or opportunities that use a captive ocip or wrap insurance program. Unlike Jumbo captives, the 831b captive's premium, that maxes, for example, at $1.2 million per year, is paid by the business to the captive. The business owner receives an immediate tax deduction for the full premium amount. The captive collects the premium income-tax-free, which is used to pay claims. Any premium in excess of paid claims accumulates to the benefit of the captive (e.g., a children's trust) and can be used to buy life insurance or paid to the trust as a dividend. This provides a 20% tax advantage, as the distribution would be taxed as a dividend/long term capital gain at 15%, versus a 35% tax rate for ordinary income. Doby is experienced in the captive arena and can structure an 831(b) captive insurance program that offers true insurance and an efficient wealth transfer mechanisms. However, recent 831 (b) Legislation proposals may dramatically limit these benefits - so time is of the essence. Our mission is to stimulate communications collaboration, education and inclusion.  

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