What Are the Financial Benefits of a Deductible Reimbursement Policy
Martin Eveleigh | June 11, 2024
Martin Eveleigh of Risk Management Advisors reveals that an operating company may achieve immediate financial benefits by using a captive insurer to issue a deductible reimbursement policy for its high deductible retentions. While a high deductible may lower overall insurance premiums, the increase to a company's bottom line faces tax consequences. By paying the full premium amount to a captive insurance company, an immediate tax deduction may be achieved for the premiums paid to the captive. The captive insurer may either defer income recognition by deducting reserves or may be exempt from income tax on the net underwriting profits.
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Martin Eveleigh | June 11, 2024