Captive insurance has been available since the 1980s. However, it still remains a secret to many due to the dominance of the larger life and health insurance organizations that customers normally choose. But, there’s the secret you don’t know about — normal health and life plans don’t allow you to invest in the company and make decisions on its course. The captive insurance industry does. And this is a reason you may want to consider it as an alternative to your current program.
Captive insurance differs from a similar program — whole insurance. With something life whole life, your policy also doubles as an investment. However, it doesn’t permit you to request or approve changes to the regulations or options of the company. All you can do is vote by proxy for board changes.In captive insurance, you invest, you receive dividends, and you have a say in the state of the company.
How do you know you’re ready to make an investment in a captive insurance company? The first thing to answer is if you have done your research. There are thousands of companies out there, each with different options in health and life insurance as well as variations in cost. If you haven’t done any research into these companies, let alone the industry, then you need to take a step back right now and do your homework.
The second thing to look at is your own portfolio. While customer input keeps many captive insurance companies stable for years, even when the regulated industry is in flux, there is always a risk that you will lose money. If you have available funds to make the necessary investments, check on which companies have had stable growth over the decades. If you require the money for debt repayments and mortgage, best to hold off for a bit.
Third, determine if you’re ready to help make decisions as part of a captive insurance investor. Some of these decisions may be small, others may change the course of your benefits or management. All clients have a say in the way the company moves ahead, and you need to have a forceful, yet willing, voice to be heard.