Economic van insurance is highly habitable in rich online tuning quotes. If you have a really kind favor, you will automatically pay a lot for utility insurance than the universality of any. The universality of the insurance subsidiaries will obtain an influx of their financial report as a matter of prudence. It has been justified that there is a direct list between your favored score and the likelihood that you are currently claiming insurance with an insurance crowd.
This means that if you are a high claimer and are looking for a cheap car insurance, you may conclude difficult. If you are looking for a wagon insurance with inferred, it could be interpreted as high risk. In addition, your insurance industry wants to know that you will pay your bills on time, so if your speculative score signals that you pay late scales as a matter of fashion, you can retain some paper to get a budget insurance. Unfortunately, many branches will judge you automatically through your loan score, including budget car insurance quotes. If you drive a splendid utility, you can wait to liquidate more for the insurance. New concerts cost more to dress, even valuable wagons do.
Do not expect to earn an excellent economic insurance if you drive a luxury van. Some car insurers have a rating system according to their scar and forcaz example. Each car has a digit in that method of subordination from 1 to 27. In this figure are included random numbers such as the theft and also the general claw of transport. For example, the ideal older forcaces that do not have gale folds are likely to be more onerous to support and, therefore, budget insurance will not conform to this criterion. If you find what you believe to be an economic mistrust insurance, pay special attention to “hidden” costs. If you are paying through time to time, you can definitely expect to spend much more over a long period of time due to the civil service costs and the commitment to scale in those payments. When you get a sniff car insurance quote, read the fine details.
A succession, what you think is a good solution for an economic utility insurance may not be the end. If you have a newer means of transportation, for example, find out what disregard your insurance escort considers “replenishment courage” in your car. You can rent the gloom repair a little more to reach the degree of your means of transport in the term that it ensures, because of the reach in blue volumes. It may surprise you to find that the universality of the insurance entities will not give you recruitment arrest if your car is locked. If you change your insurer, be sure to make up the current donation you have with your previous insurer, or you may end up paying the two stamps. The fact that you decide to attribute a small cost policy does not mean that your previous insurer will automatically cancel your insurance policy.
It is a good idea to know all the details of a last cost insurance stamp. The fact that you pay extra for the cheapest car insurance does not mean you’re getting the best long-term auction. Full representation is vital since the predicted insurance may not be the best option.
Car insurance in a valuable consumption, therefore, look in Budget Car Insurance to avoid, consult Specialist Auto Insurance to assimilate your best alternatives.
Auto Insurance Companies Offer Cost Effective Insurance Premiums
There are numerous profitable car ins vacancies for the inhabitants that will offer you the best proposal. The main interpretation of these shows is to carpet certain costs of relapse due to fire, dispossession or accident in the transport. A list of insurance options offered by original companies are detailed. Cost-effective transportation insurance covers all transports, including utilities, mopeds and trucks. Car insurance in South Africa is mainly responsible for fucking the deserved depreciations to accidents on the street and due to degeneration, such as the termination of transportation transport.
There is a gradation of legions of insurance online from which a quote can catch. We suggest that you obtain all the quotes you used to make in the past. It is also a good conceptualization that insurance corporations know that you are looking for the best quote. This will help them provide the best possible bid. This type of profitable insurance can cover: Third parties. The insurance of the car or motorcycle. The possessor or insured motorist. There is an assortment of differences related to the disorder originated by accident, fire or pillage. Several stamps will even pay variable torrents for incurred losses. In South Africa, car insurance is not inevitable. In the universality of the other states, it is unconscious to declare with insurance for your car. South Africa has a well-known Road Accident Fund, the flow is derived from naphtha taverns and this flow is used to reward third parties for any degeneration or damage. Insurance legions in South Africa set insurance premiums, this a posteriori to consult with the government and follow their handles.
The certifiers have indication and report on the counting of the premiums. They do it through the study of various statistical points. Another consultancy needed to limit the cost of insurance premiums includes, among others, if the car has a signal, an immobilizer, flato wallets, etc. The sexual act of the pilot is also important since it is the reason for driving the means of transport. Is it going to be used for daily tournees or is it for commercial use only? The aristocrats lead except that the males and, therefore, have separate accidents than the men.
The maximum heads of 35 years will pay separately than any small ones of 25 years. There is a high incidence of baggage and seizure in South Africa and for this intelligence all insurance entities will not grant a wage card apart from the fact that the van has an accepted emergency procedure and / or an anti-seizure procedure accepted in the transport. In a hugely small event, the color of the wagon can even be calibrated by specifying insurance premiums.
There are plenty of inexpensive auto insurable vacancies for those who will offer you the best proposition. More revelation about how carriers determine insurance in our online guardianship.
Affordable Car Insurance Coverage for Senior Drivers
The upper utility insurance is traced for any long-lived. Any old people are old inhabitants of 50 years. The different insurance troops establish a unique age for any maximum. If a partner is more than 50 years old but the other one is not, the policy quackery will be included in the upper insurance stamp. It can be disconcerting to get the sanction for superior car insurance. Often, the insurance escort will charge a valuable premium cost in senior utility insurance. It has an enrollment charge of premiums due to the high events associated with the dean pilots. Maximum pilots tend to find accidents frequently because their phalanges are failing. For example, mature pilots have poor inspections so they can not repair properly. It is important to mortgage the entire correct cover in your senior car insurance.
According to the survey conducted by the branch of the USA Uu., The biography security of the affable being increases every year. Nowadays, you can guess a great tonality of insurance stamps for deans. Previously, there are small alternatives for insurance deliveries for long-lived people. Getting a senior carriage insurance will protect you from accidents. Any maximums need insurance because they can be involved in accidents at any time. Having superior automobile insurance will protect you from financial oppression.
Although premium car insurance is onerous, there are many ways to overwhelm the cost. You can accept a lapse of road care. Enroll in a course of road instruction will a more maternal cicerone. There is a trading time traced specifically for old cicerones. It teaches the old postillions how to deal with flamboyant sections of situations on the road. For example, the collectivity of accidents involving mature pilots occur at the confluences of commerce. The road teaching vault will teach the main driver how to turn off the axis by paying caution to the cruise signs found on the road junctions. In this way, you will continue to be the full rail. It can be difficult to hold the car on a different rail.
The most understandable phase of earning budgets for senior concert insurance is filling out the online research recipe book. You will have to answer several questions when retouching the recipe book of the online research, which includes the hacienda of the means of transport, the daily mileage, the usufruct of the wagon, the mileage consultancy, etc. You can decide the amount of the deductible you want to settle. If you pay a higher deductible, the cost of your premium will be lower. Paying the lower deductible will increase the cost of the premium. There are two deductible subjects in the senior car insurance awards, including the total and shake deductible. The deductible ranges from $ 200 – $ 500. You can cover the blanket flush for your insurance stamp. The more you add to the car insurance stamp, the older the cost of the premium will be. In addition, you should also seek your compensator and polo affirmation by retouching the online recipe book. Clients can act images between insurance quotes using the insurance quotes pursuit engine. To render the hunting engines of insurance quotes, you must provide your postal regulations, sentida and etc. After achieving the chosen quote, you can contact the insurance escort to receive an exact quote.
Compare the utility insurance quotes for maximum interpreters and see how much you can save already. Explore appearances of linking discounts on auto insurance.
Gadgets are an integral part of our daily lives. Each of us uses gadgets for a variety of purposes, from communicating with our family and friends to talking with our clients and our boss. Several gadgets are available, each one dedicated to a particular task, some are for surfing the Internet, others are for chatting and even just for images. Gadgets help you save time and increase your overall productivity, whether at home or at the office. Gadgets are a valuable part of your life and you do not want to lose them for theft or breakdown. Therefore, insurance is what you need to ensure the safety of your precious contraption.
Get the best gadget insurance to meet your needs
There are millions of different types of gadgets and to meet the growing needs there are thousands of different insurance plans. These plans are not the same; They all offer different levels of protection. Even if the plans are similar, you will notice that the level of protection is very different if you spend some time with the actual conditions. Therefore, if you consider a gadget insurance, you should consider the coverage features and not the packages. Most insurance packages use similar titles and have the same characteristics; but they differ in price. The reason is the level of protection and the areas covered. These differences may seem small, but when it comes to claiming your insurance, they can do wonders, either positive or negative, according to your insurance. When choosing your gadget insurance, you should avoid any plan that is undervalued or overvalued, as these are the ones that have many loopholes. Many high-priced plans may contain robust solutions and coverage; However, the actual coverage you need is not taken into account. Therefore, when choosing your insurance you need to think about your device and what might happen; Choose the perfect plan for your needs.
Find out what your gadget insurance really insures
Your gadgets can be damaged by a variety of factors, so you need a way to control most of them, at least the most common and most distant from them. You can easily protect your devices from drops and damages. but there is no way to protect them from the weather. Of course, you can block and package it safely, but if you use it, it is prone to damage. If you are considering an insurance plan, do not think about today; Take some time to prepare for the future, where will you use it and what could happen? Once you know exactly what you need, check out the various gadget insurance and choose the one that best suits your needs. Once the pre-selected list is created, go the extra mile and choose the one that is absolutely perfect. Spending time, choosing the right plan is not a waste of time. On the other hand, if you hurry and choose the first plan that appears, you will regret it.
You can get your device insurance phone to protect your phone from drops and damages.
Buying online has many advantages, but is there any advantage to buying car insurance online? Many people who buy auto insurance quotes online have discovered that the convenience of obtaining insurance information on their computers can save them time and money. These are some of the benefits of online car insurance quotes:
Cheap car insurance:
Receiving multiple car insurance offers online in real time allows you to save money immediately. If I were buying offers on the phone, I would normally spend a lot of time with the agents. Agents usually do not let you leave the phone or office until you have given and purchased insurance with them. The Best Online Car Insurance Guide. By choosing to buy your car insurance online, you can take control to decide which insurance quotes are right for you. There is no pressure to buy immediately, and you can always return to the quotes you have received and make a decision.
Online shopping insurance allows you to obtain instant comparisons between offers. Many insurance companies can offer you instant quotes online. There are also many websites that offer quick insurance quote services that allow users to compare insurance offers online from different companies. Receiving results instantly saves time and eliminates the hassle of calling multiple agents and companies to obtain pricing information.
To be educated:
It is important that you can get instant and cheap insurance quotes, but buying online for your insurance also gives you another advantage. a way to educate oneself You can find a lot of information about insurance and coverage. You can also look for insurance qualification information for customer service and financial strength information.
Although there are many advantages to buying insurance online, an important factor is missing. a living agent Sometimes, buying insurance alone or by phone can be a more personal experience, especially if an agent knows you and knows your needs. Although many online insurance companies have contact information, they usually do not spend time researching your personal finances to provide you with a customized policy that fits your budget and needs. A real real agent can be an invaluable asset when buying car insurance.
There are many useful tips and advice on online car insurance, be sure to buy several different insurance policies to determine the best option for you.
Comparison shopping is the best and easiest way to find the cheapest car quote on insurance car rates – and doing this online is not only convenient and fast, but can save you money, as well.
Just knowing that uninsured drivers can face stiff punishment for merely being stopped without proof of coverage, should be enough to convince you to start researching car insurance rates as quickly as possible.
Providing as much detail as you can, ensures that you get the discount you qualify for. Not giving complete information such as your zip code, marital status, car’s safety features and commuting miles, could mean a higher quote from the insurance companies.
Increase your deductible, as an example, from $250 to $500. In doing this, you will save hundred of dollars on your annual premium, which qualifies you for the cheapest car quote. Keep in mind though, in case of an accident, you would have to cover the deductible.
Drivers who travel less miles per day (40 miles on average) qualify for a mileage discount with most insurance companies. Using public transportation and carpooling a few times a year, are some of the ways you can qualify for lower insurance car rates.
Anti-theft devices reduce the risk of your car being stolen. Therefore, by installing a tracking system or car alarm, the insurance companies can then pass the savings on to you with a discount on your car insurance rates.
Taking a defensive driving class that’s certified can also reduce your premium for three years, with most insurance companies. Other things to consider…
Insurance companies take note of your driving record. So, stay within the speed limit and obey the traffic laws. Safe drivers are less of a risk and often get great deals on insurance car rates.
Insurance companies sometimes reward students with good grades by giving student discounts.
You can always find a bargain on insurance rates if you know where to look. Start online to compare the cheapest car quotes that are available for you to view in the comfort of your home or office.
In closing, remember to always seek help from a licensed car insurance professional when comparing the best insurance car rates.
For savings of up to 40% on insurance car rates, from top companies nationwide visit this link: Car Quote Insurance, and get multiple Free comparison quotes within minutes.
It’s Cheap to Insure Cars – Figure Car Insurance Costs in Your Monthly Payments
It seems like you’ve spent all day and half the evening wrangling with the car salesman trying to buy a car and get a loan with affordable monthly payments.
But you didn’t figure on your car insurance. So now you’re paying for your car but you realize that it costs a lot more than you figured just to keep it on the road.
If you could go back in time maybe you would have bought a different car – one of the cheap to insure cars.
To prevent this from happening next time you can make sure that you have a pretty good idea of all the money it will cost for your next vehicle before you even step into the showroom – car insurance.
As far as insurance goes, dollar claims for economy cars are a lot lower than they are for sports cars. Makes sense, too. If you buy a powerful car you probably want to use that power. And if you get into an accident it will cost more to repair a high performance car than it does to repair an econobox – car insurance.
Sometimes parts have to be ordered from foreign countries. Even standard parts might not be available from local repair shops.
Other cars might not get into a large number of accidents, but when they do they cause a lot of damage to other cars. This can result in having to pay large amounts of money for liability coverage for the car – car insurance.
And some cars are almost like catnip for cats. They’re like bait for auto thieves. And the insurance companies will charge you more for theft coverage for these cars than they would for others. And we’re not necessarily talking about exotic sports cars here – car insurance.
There are other factors, like your age, driving record, where you live, your gender, and so on, that affect your bill. But you knew about that already, didn’t you? – car insurance.
You can save a lot of money and keep your new car on the road if you look into which cars are cheap to insure before you buy your next vehicle.
lines below you can find out how you can get cheap car insurance
How To Outwit Your Insurance Provider When It Comes To Insurance Car Quotes
If you are one of those people who believe everything that you are told (some refer to it as being you are in all probability being taken for a ride with regards to your motor insurance! Quite a few folks don’t realize that it’s not smart to accept the first car insurance quotation that you are offered – you are able to (and you should!) shop around, contrast prices and negotiate with the insurance companies!
It is quite significant to always be a single step ahead of the insurance firms. Compare and contrast as many insurance car quotes as possible – more than 5 is often an excellent idea. When you discover a car insurance quote that you are reasonably satisfied with, your actual negotiation can begin.
Many insurance businesses claim that they will match or beat any other written car insurance quote that you provide them with. This is not merely a rumour, put them to the test!
Insurance car quotes and policies are obtainable in all shapes and sizes. Again it is a great idea to be prepared before you even approach an insurance company. You’ll have to select between third party insurance, third party with theft and fire insurance and fully comprehensive insurance, just to mention a few. Third party insurance is the most basic and most affordable option, while fully comprehensive insurance offers more cover at an elevated cost. But then again, not all comprehensive policies are comprehensive! Some car insurance policies will include roadside assistance or the use of a rental car, while others won’t.
Decide beforehand what you expect from your insurance policy and how much (more or less) you are willing to spend. In case you arrive at an insurance company with a confused facial expression, they will know that you are possibly a little clueless and make the most of their gullible client.
You don’t have to remain with the exact same insurance company year in and year out. As soon as it is almost time to renew your insurance policy, you must also do a bit of shopping around. Compare and contrast a couple of insurance car quotes from other companies too! If you have an insurance broker it can make life so much simpler for you – discuss your requirements with the broker and leave it up to him (or her!) to find you the greatest current policy for your needs and requirements. Once again, you can inform the insurance business that you are terminating your policies and moving to a company with much better rates, services or value added choices – they may possibly just come back with a counter offer and convince you to stay.
Keep in mind that the insurance industry is a quite competitive industry. There are many insurance firms, agents and brokers all competing for the same buyers’ attention. If you are not satisfied with the first option(s) you are presented with, simply continue shopping. It doesn’t make sense paying your monthly insurance premiums on time each month if you are not completely satisfied with your insurance policy and the services offered by your insurance company. You’re the client, ensure that you don’t settle for second best!
Be Wise in Choosing Among the Maritime Lawyers Houston
At the very moment human beings are born in the world, everyday of his life becomes shorter because accident is just always around the corner. We really do not know the things that await us at the end of the line. If you are one of the many workers in the offshore of Texas, you should know the fact that half of your leg is in the grave. Maritime work is regarded as one of the most dangerous jobs in the United States of America. Maritime Lawyers Houston- Now, if you are injured while working in port, platform, vessel or on a certain offshore rig, there is still a chance for you to receive your full compensation. This is by entrusting your case to professional maritime lawyers. Yes, there are lots of lawyers who promise that they will handle your case very well but they will just refer your case to another lawyer. These are the types of maritime lawyers which you should get rid of. So, it is very important for you to know where to look for a highly respectable lawyer who can handle general maritime law and Jones Act cases. Why not look for a well-known firm which is highly recognized? Maritime Lawyers Houston – This can be the one to help you choose the best maritime lawyer or Texas Jones Act attorney. At present, there are different law firms online that offers advance services to clients. Aside from reputation, another thing which must be of your prime consideration is your financial capability. You don’t need to pay a very high amount just to get a superior service because there are also firms which main concern is to give service to maritime workers buy asking for few payments.
The main work of Maritime Lawyers Houston and a Texas Jones Act attorney is to help all individuals in the maritime industry to exercise their rights in getting their full compensation the moment they suffer from injury at the very course of their work. The following are just some of the maritime workers which they represent: injured harbour workers, seamen and maritime workers. To maximize the recovery for several injury cases, you also have to choose the right forum in order for your case to be heard. Cases just like yours will never be that long to solve if it will be brought to the right place wherein it will receive a fair hearing. Aside from that, your Jones Act attorney must also have the superior ability to handle complicated litigations which extend beyond cases about international personal injury, insurance dispute claims, military contractor claims and aviation accident claims.
Since accidents can never really be avoided in a workplace just like a maritime industry, you must always be ready anytime. You must know what firm to choose and the Jones Act attorney you will entrust your case. Be very wise and intelligent in choosing the right lawyer because the money you will pay them must be worth the service they will give.
Know more about the know-how regarding Houston Maritime Lawyer, and Texas Jones Act Attorney by checking out my website.
Over the past 20 years, many small businesses have begun to insure their own risks through a product called “Captive Insurance.” Small captives (also known as single-parent captives) are insurance companies established by the owners of closely held businesses looking to insure risks that are either too costly or too difficult to insure through the traditional insurance marketplace. Brad Barros, an expert in the field of captive insurance, explains how “all captives are treated as corporations and must be managed in a method consistent with rules established with both the IRS and the appropriate insurance regulator.”
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According to Barros, often single parent captives are owned by a trust, partnership or other structure established by the premium payer or his family. When properly designed and administered, a business can make tax-deductible premium payments to their related-party insurance company. Depending on circumstances, underwriting profits, if any, can be paid out to the owners as dividends, and profits from liquidation of the company may be taxed at capital gains.
Premium payers and their captives may garner tax benefits only when the captive operates as a real insurance company. Alternatively, advisers and business owners who use captives as estate planning tools, asset protection vehicles, tax deferral or other benefits not related to the true business purpose of an insurances company may face grave regulatory and tax consequences.
Many captive insurance companies are often formed by US businesses in jurisdictions outside of the United States. The reason for this is that foreign jurisdictions offer lower costs and greater flexibility than their US counterparts. As a rule, US businesses can use foreign-based insurance companies so long as the jurisdiction meets the insurance regulatory standards required by the Internal Revenue Service (IRS).
There are several notable foreign jurisdictions whose insurance regulations are recognized as safe and effective. These include Bermuda and St. Lucia. Bermuda, while more expensive than other jurisdictions, is home to many of the largest insurance companies in the world. St. Lucia, a more reasonably priced location for smaller captives, is noteworthy for statutes that are both progressive and compliant. St. Lucia is also acclaimed for recently passing “Incorporated Cell” legislation, modeled after similar statutes in Washington, DC.
Common Captive Insurance Abuses; While captives remain highly beneficial to many businesses, some industry professionals have begun to improperly market and misuse these structures for purposes other than those intended by Congress. The abuses include the following:
Improper risk shifting and risk distribution, aka “Bogus Risk Pools”
High deductibles in captive-pooled arrangements; Re insuring captives through private placement variable life insurance schemes
Inappropriate life insurances integration
Meeting the high standards imposed by the IRS and local insurance regulators can be a complex and expensive proposition and should only be done with the assistance of competent and experienced counsel. The ramifications of failing to be an insurance company can be devastating and may include the following penalties:
Loss of all deductions on premiums received by the insurance company
Loss of all deductions from the premium payer
Forced distribution or liquidation of all assets from the insurance company effectuating additional taxes for capital gains or dividends
Potential adverse tax treatment as a Controlled Foreign Corporation
Potential adverse tax treatment as a Personal Foreign Holding Company (PFHC)
Potential regulatory penalties imposed by the insuring jurisdiction
Potential penalties and interest imposed by the IRS.
All in all, the tax consequences may be greater than 100% of the premiums paid to the captive. In addition, attorneys, CPA’s wealth advisors and their clients may be treated as tax shelter promoters by the IRS, causing fines as great as $100,000 or more per transaction.
Clearly, establishing a captive insurance company is not something that should be taken lightly. It is critical that businesses seeking to establish a captive work with competent attorneys and accountants who have the requisite knowledge and experience necessary to avoid the pitfalls associated with abusive or poorly designed insurances structures. A general rule of thumb is that a captive insurance product should have a legal opinion covering the essential elements of the program. It is well recognized that the opinion should be provided by an independent, regional or national law firm.
Risk Shifting and Risk Distribution Abuses; Two key elements of insurance are those of shifting risk from the insured party to others (risk shifting) and subsequently allocating risk amongst a large pool of insured’s (risk distribution). After many years of litigation, in 2005 the IRS released a Revenue Ruling (2005-40) describing the essential elements required in order to meet risk shifting and distribution requirements.
For those who are self-insured, the use of the captive structure approved in Rev. Ruling 2005-40 has two advantages. First, the parent does not have to share risks with any other parties. In Ruling 2005-40, the IRS announced that the risks can be shared within the same economic family as long as the separate subsidiary companies ( a minimum of 7 are required) are formed for non-tax business reasons, and that the separateness of these subsidiaries also has a business reason. Furthermore, “risk distribution” is afforded so long as no insured subsidiary has provided more than 15% or less than 5% of the premiums held by the captive. Second, the special provisions of insurance law allowing captives to take a current deduction for an estimate of future losses, and in some circumstances shelter the income earned on the investment of the reserves, reduces the cash flow needed to fund future claims from about 25% to nearly 50%. In other words, a well-designed captive that meets the requirements of 2005-40 can bring about a cost savings of 25% or more.
While some businesses can meet the requirements of 2005-40 within their own pool of related entities, most privately held companies cannot. Therefore, it is common for captives to purchase “third party risk” from other insurance companies, often spending 4% to 8% per year on the amount of coverage necessary to meet the IRS requirements.
One of the essential elements of the purchased risk is that there is a reasonable likelihood of loss. Because of this exposure, some promoters have attempted to circumvent the intention of Revenue Ruling 2005-40 by directing their clients into “bogus risk pools.” In this somewhat common scenario, an attorney or other promoter will have 10 or more of their clients’ captives enter into a collective risk-sharing agreement. Included in the agreement is a written or unwritten agreement not to make claims on the pool. The clients like this arrangement because they get all of the tax benefits of owning a captive insurance company without the risk associated with insurance. Unfortunately for these businesses, the IRS views these types of arrangements as something other than insurance.
Risk sharing agreements such as these are considered without merit and should be avoided at all costs. They amount to nothing more than a glorified pretax savings account. If it can be shown that a risk pool is bogus, the protective tax status of the captive can be denied and the severe tax ramifications described above will be enforced.
It is well known that the IRS looks at arrangements between owners of captives with great suspicion. The gold standard in the industry is to purchase third party risk from an insurance company. Anything less opens the door to potentially catastrophic consequences.
Abusively High Deductibles; Some promoters sell captives, and then have their captives participate in a large risk pool with a high deductible. Most losses fall within the deductible and are paid by the captive, not the risk pool.
These promoters may advise their clients that since the deductible is so high, there is no real likelihood of third party claims. The problem with this type of arrangement is that the deductible is so high that the captive fails to meet the standards set forth by the IRS. The captive looks more like a sophisticated pre tax savings account: not an insurance company.
A separate concern is that the clients may be advised that they can deduct all their premiums paid into the risk pool. In the case where the risk pool has few or no claims (compared to the losses retained by the participating captives using a high deductible), the premiums allocated to the risk pool are simply too high. If claims don’t occur, then premiums should be reduced. In this scenario, if challenged, the IRS will disallow the deduction made by the captive for unnecessary premiums ceded to the risk pool. The IRS may also treat the captive as something other than an insurance company because it did not meet the standards set forth in 2005-40 and previous related rulings.
Private Placement Variable Life Reinsurance Schemes; Over the years promoters have attempted to create captive solutions designed to provide abusive tax free benefits or “exit strategies” from captives. One of the more popular schemes is where a business establishes or works with a captive insurance company, and then remits to a Reinsurance Company that portion of the premium commensurate with the portion of the risk re-insured.
Typically, the Reinsurance Company is wholly-owned by a foreign life insurance company. The legal owner of the reinsurance cell is a foreign property and casualty insurance company that is not subject to U.S. income taxation. Practically, ownership of the Reinsurance Company can be traced to the cash value of a life insurance policy a foreign life insurance company issued to the principal owner of the Business, or a related party, and which insures the principle owner or a related party.
The IRS may apply the sham-transaction doctrine.
The IRS may challenge the use of a reinsurance agreement as an improper attempt to divert income from a taxable entity to a tax-exempt entity and will reallocate income.
The life insurance policy issued to the Company may not qualify as life insurance for U.S. Federal income tax purposes because it violates the investor control restrictions.
Investor Control; The IRS has reiterated in its published revenue rulings, its private letter rulings, and its other administrative pronouncements, that the owner of a life insurance policy will be considered the income tax owner of the assets legally owned by the life insurance policy if the policy owner possesses “incidents of ownership” in those assets. Generally, in order for the life insurance company to be considered the owner of the assets in a separate account, control over individual investment decisions must not be in the hands of the policy owner.
The IRS prohibits the policy owner, or a party related to the policy holder, from having any right, either directly or indirectly, to require the insurance company, or the separate account, to acquire any particular asset with the funds in the separate account. In effect, the policy owner cannot tell the life insurance company what particular assets to invest in. And, the IRS has announced that there cannot be any prearranged plan or oral understanding as to what specific assets can be invested in by the separate account (commonly referred to as “indirect investor control”). And, in a continuing series of private letter rulings, the IRS consistently applies a look-through approach with respect to investments made by separate accounts of life insurance policies to find indirect investor control. Recently, the IRS issued published guidelines on when the investor control restriction is violated. This guidance discusses reasonable and unreasonable levels of policy owner participation, thereby establishing safe harbors and impermissible levels of investor control.
The ultimate factual determination is straight-forward. Any court will ask whether there was an understanding, be it orally communicated or tacitly understood, that the separate account of the life insurance policy will invest its funds in a reinsurance company that issued reinsurance for a property and casualty policy that insured the risks of a business where the life insurance policy owner and the person insured under the life insurance policy are related to or are the same person as the owner of the business deducting the payment of the property and casualty insurance premiums?
If this can be answered in the affirmative, then the IRS should be able to successfully convince the Tax Court that the investor control restriction is violated. It then follows that the income earned by the life insurance policy is taxable to the life insurance policy owner as it is earned.
The investor control restriction is violated in the structure described above as these schemes generally provide that the Reinsurance Company will be owned by the segregated account of a life insurance policy insuring the life of the owner of the Business of a person related to the owner of the Business. If one draws a circle, all of the monies paid as premiums by the Business cannot become available for unrelated, third-parties. Therefore, any court looking at this structure could easily conclude that each step in the structure was prearranged, and that the investor control restriction is violated.
Suffice it to say that the IRS announced in Notice 2002-70, 2002-2 C.B. 765, that it would apply both the sham transaction doctrine and §§ 482 or 845 to reallocate income from a non-taxable entity to a taxable entity to situations involving property and casualty reinsurance arrangements similar to the described reinsurance structure.
Even if the property and casualty premiums are reasonable and satisfy the risk sharing and risk distribution requirements so that the payment of these premiums is deductible in full for U.S. income tax purposes, the ability of the Business to currently deduct its premium payments on its U.S. income tax returns is entirely separate from the question of whether the life insurance policy qualifies as life insurance for U.S. income tax purposes.
Inappropriate Marketing; One of the ways in which captives are sold is through aggressive marketing designed to highlight benefits other than real business purpose. Captives are corporations. As such, they can offer valuable planning opportunities to shareholders. However, any potential benefits, including asset protection, estate planning, tax advantaged investing, etc., must be secondary to the real business purpose of the insurance company.
Recently, a large regional bank began offering “business and estate planning captives” to customers of their trust department. Again, a rule of thumb with captives is that they must operate as real insurance companies. Real insurance companies sell insurance, not “estate planning” benefits. The IRS may use abusive sales promotion materials from a promoter to deny the compliance and subsequent deductions related to a captive. Given the substantial risks associated with improper promotion, a safe bet is to only work with captive promoters whose sales materials focus on captive insurance company ownership; not estate, asset protection and investment planning benefits. Better still would be for a promoter to have a large and independent regional or national law firm review their materials for compliance and confirm in writing that the materials meet the standards set forth by the IRS.
The IRS can look back several years to abusive materials, and then suspecting that a promoter is marketing an abusive tax shelter, begin a costly and potentially devastating examination of the insured’s and marketers.
Abusive Life Insurance Arrangements; A recent concern is the integration of small captives with life insurance policies. Small captives treated under section 831(b) have no statutory authority to deduct life premiums. Also, if a small captive uses life insurance as an investment, the cash value of the life policy can be taxable to the captive, and then be taxable again when distributed to the ultimate beneficial owner. The consequence of this double taxation is to devastate the efficacy of the life insurance and, it extends serious levels of liability to any accountant recommends the plan or even signs the tax return of the business that pays premiums to the captive.
The IRS is aware that several large insurances companies are promoting their life insurances policies as investments with small captives. The outcome looks eerily like that of the thousands of 419 and 412(I) plans that are currently under audit.
All in all Captive insurance arrangements can be tremendously beneficial. Unlike in the past, there are now clear rules and case histories defining what constitutes a properly designed, marketed and managed insurances company. Unfortunately, some promoters abuse, bend and twist the rules in order to sell more captives. Often, the business owner who is purchasing a captive is unaware of the enormous risk he or she faces because the promoter acted improperly. Sadly, it is the insured and the beneficial owner of the captive who face painful consequences when their insurance company is deemed to be abusive or non-compliant. The captive industry has skilled professionals providing compliant services. Better to use an expert supported by a major law firm than a slick promoter who sells something that sounds too good to be true.