The Benefits of Captive Insurance

Randy Sadler is the Principal of CIC Services LLC, where he helps small & mid-sized business owners turn their risk into wealth by owning their own insurance company. If you own one or more dental practices that are generating a significant amount of revenue, there are a lot of risks involved. So, captive insurance enables you to insure your businesses against internal and external threats while adding another stream of revenue. Not only do you get to protect your business by writing a check to yourself; you get to reap the tax benefits of owning an insurance company as well.

Build Long Term Wealth

If you buy insurance from yourself, the insurance company can often be taxed as low as 0% on profit. It enables dental practice owners to build reserves for future losses while building long term wealth. But captive insurance does not have to be the end all be all. It is extremely flexible because practice owners can choose which parts of their businesses they want to insure in-market, and which parts they want to insure in the captive. There are a lot of things you probably haven’t been considered for insurance yet; things like harassment lawsuits and business interruptions. However, captive insurance allows you to create a plan that is unique to your practice and the threats it faces.

Continue Generating Passive Income

The less you have to use your insurance the better. And once you’ve owned the insurance company for a period of time, there are ways to access the reserves you’ve built up. One way to do this is by having the captive pay you a dividend. Another option is to surrender your insurance license which defaults your insurance company to a C-corp where it becomes an investment holding company. From there, you can continue to do investments that generate passive income or even take loans against the holding company. There are many financial benefits to captive insurance, so if you want to learn more, listen to Randy Sadler’s episode, “Captive Insurance for Dental Practice Owners,  with Randy Sadler.” As always, please visit me at www.theprogressivedentist.com for more informative podcast episodes with other remarkable business leaders.