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4- Part Test

Our 4-Part Test ensures your 831(b) Plan meets tax code standards by verifying risk transfer, distribution, fortuitous risk, and adherence to insurance principles – essential for safeguarding your business.

Benefits of Our 831(b) Risk Management Plans

  • Tailored Risk Solutions
    Our 831(b) Plans are customized to address the unique risks and liabilities of your business, ensuring comprehensive coverage that aligns with your specific needs.
  • Increased Financial Stability
    By setting aside tax-deferred funds, our plans help businesses prepare for unforeseen risks, reducing financial strain and enhancing long-term stability.
  • Scalability for Growth
    As your business expands, our 831(b) Plans grow with you, adapting to cover new risks and ensuring ongoing protection as your needs evolve.
  • Cost Efficiency
    While initial setup costs may be involved, our 831(b) Plans often result in significant long-term savings by reducing the need for multiple insurance policies and improving cash flow management.
  • Competitive Edge
    Mitigating underinsured and uninsured risks gives your business a competitive advantage, allowing you to operate with confidence and respond quickly to market changes.
  • Data and Asset Protection
    With control over your risk management strategy, our plans provide enhanced security, safeguarding your assets and sensitive data according to your organization’s standards.
  • Seamless Integration
    Our 831(b) Plans integrate smoothly with your existing risk management and insurance programs, ensuring optimal coverage without disrupting your operations.
  • Ongoing Support and Flexibility
    You have the option to choose tailored maintenance and support packages, keeping your risk management plan updated and effective as your business evolves.

Our 4 Part-Test

Built on the foundations of Rev. Ruling 2009-26 and recent court rulings, we have created a stringent 4-Part Test to ensure 831(b) Plan compliance. Each part of the test is essential to successfully owning your 831(b) and the ability to elect under the 831(b) Tax Code.

01

Risk Transfer

The operating company must contractually transfer risk to an insurer. This 831(b) Plan uses a Direct Writer to underwrite risks and issue policies for premiums.

02

Risk Distribution

To limit the impact of large claims, the 831(b) Plan spreads risk among unrelated parties, utilizing risk co-ops that share risks proportionately.

03

Fortuitous Risk

The risk must be fortuitous, not ordinary business risk. Our Direct Writer covers various fortuitous risks, including business interruptions and political risk.

04

Insurance Principles

The 831(b) Plan operates like a for-profit insurer, following principles such as risk transfer, premium determination, claims processing, and reserve management.

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