The Power of Private Insurance: A Hidden Wealth Strategy for Law Firm Owners and Their Clients

Most business owners believe insurance is simply a necessary cost of doing business. Pay your premiums, hope you never use it, and move on. But what if those same premiums could transform into a powerful wealth-building and tax strategy?

That’s exactly what I explored in a recent conversation with business leader and insurance specialist Craig Clemons on the March to a Million podcast. The discussion revealed how private insurance structures, often called captive or reinsurance companies, allow entrepreneurs to self-insure risks while simultaneously creating a new pool of capital.

What Is Private Insurance?

Private insurance isn’t new. In fact, it dates back to the 1600s when Lloyd’s Coffee House in London evolved into what we now know as Lloyd’s of London. Today, 92% of Fortune 500 companies use this strategy. Yet for many small and mid-sized firms, it remains a best-kept secret.

Here’s the core idea: every business faces risks beyond what traditional property and casualty insurance covers—things like business interruption, reputational damage, regulatory changes, cyberattacks, or the loss of key talent. Instead of leaving those gaps uninsured, a third-party actuary identifies and quantifies them. The business can then set up its own insurance company (a C corporation) to cover those risks, paying tax-deductible premiums into the structure.

How Private Insurance Works in Practice

Premiums Become Assets 

Rather than disappearing into the balance sheets of big insurance companies, premiums paid into a private insurance company accumulate. If claims are low, the pool of funds grows year after year.

Flexibility of Use 

Over time, the business owner can deploy these funds into investments—real estate, stocks, even case funding for a law firm. Claims can also be paid directly from this pool, offering more control than a traditional carrier.

Scalability Across Business Sizes 

While large law firms or construction companies might fund millions annually, even smaller practices with $500K–$750K in revenue can participate through preferred shareholder structures, sometimes inside a self-directed Roth account. This opens the door to future tax-free growth.

Why Estate Planning Attorneys Should Pay Attention to Private Insurance

Perhaps most exciting is the role private insurance can play in succession and estate planning. By transferring ownership of the insurance company into a trust, business owners can:

• Create a vehicle for generational wealth transfer 

• Retain control of capital after selling the operating business 

• Provide heirs with a ready-made investment company funded by years of premiums 

As Clemons explained, a business owner who sells their practice may lose their operating income—but they retain a C corporation holding millions in accumulated premiums. This structure can support retirement income, seed new ventures, or be passed to heirs with strategic tax advantages.

A Competitive Edge for Attorney-Advisors

For members of the Wealth Solutions Network, private insurance isn’t just another planning tool. It’s a differentiator. Few clients—even sophisticated ones—are aware of this strategy. Advisors who can introduce it will not only protect clients against hidden risks but also open doors to significant tax savings and long-term wealth creation.

Key Takeaways

1. Private insurance has been around for centuries and is widely used by Fortune 500 companies. 

2. Any business with $500K+ in revenue should evaluate its potential. 

3. Premiums are tax-deductible, creating an immediate financial benefit. 

4. Capital inside the structure grows and can be invested, turning insurance into an asset rather than a cost. 

5. Estate planning applications make it especially powerful for attorneys and business owners looking to preserve legacy wealth. 

At WSN, our mission is to equip attorney-advisors with insights like this—tools that create deeper value for clients and differentiate your practice. 

If you’d like to learn more about how private insurance structures might integrate into your planning conversations, listen to the full conversation on March to a Million Episode 52: The Private Insurance Strategy Every Business Owner Should Know with Craig Clemons.