How the Ultra-Wealthy Use Captive Insurance for Tax Efficiency

In this episode of The High Net Worth Podcast, Lucas and Luna explore how ultra-wealthy families use captive insurance companies — specifically small, privately-held insurers — to reduce taxable income, build tax-deferred wealth, and cover risks that commercial insurers won't touch. They walk through a real-world example: a family-owned commercial real estate portfolio that self-insures its property liability through a captive based in Vermont, saving roughly $400,000 annually in premiums that would otherwise go to a third-party carrier while also deducting those premiums against the business's taxable income. Lucas explains the IRS '80/20 rule' that limits how much third-party risk a captive can take on, and why Section 831(b) captives (which elect to be taxed only on investment income) have become a popular structure for families with $10 million or more in annual revenue. The hosts also discuss common pitfalls, including the risk of the IRS reclassifying the captive as a 'sham' if it lacks real insurance risk. This episode is part of the Fexingo Business podcast network. #CaptiveInsurance #TaxStrategy #WealthManagement #HighNetWorth #IRS #Section831b #VermontCaptive #SelfInsurance #CommercialRealEstate #TaxDeduction #RiskManagement #FamilyOffice #Finance #BusinessPodcast #FexingoBusiness #TheHighNetWorthPodcast #Podcast #WealthTransfer Keep every episode free: buymeacoffee.com/fexingo