A self-insured person is someone who chooses not to pay premiums to buy insurance protection against large losses, such as a car accident or illness. Instead, he or she builds up a cash reserve to cover the cost of these events. The concept is not limited to individuals, but can also apply to businesses and organizations.
A company may decide to become self-insured by setting up a captive or forming an OOD (one owner limited liability company). While a captive requires more work and planning, it provides the potential for better returns than traditional insurance, since the money from premiums is returned to shareholders annually in the form of dividends or investment income.
Similarly, an organization that has the financial ability to absorb the costs of large losses can choose to be self-insured by investing in stocks and bonds. However, it is important to note that not all companies are able to do this, as there are still many risks associated with investing, such as market fluctuations and unforeseen events.
For example, if an organization loses an employee or business partner, the financial impact can be devastating. The key is to have sufficient funds available to cover a loss, which is why it is often necessary to purchase life insurance. The amount of money an individual needs to have saved in order to be considered self-insured will vary depending on his or her stage of life, and may include investments as well as savings.
While it is possible to be self-insured in certain situations, experts recommend that everyone carry a minimum of auto insurance, even in the two states that don’t require it, home insurance for their primary residence, and health insurance for themselves and their family members. Without this safety net, it is very easy to lose significant assets or end up in financial ruin.
A person who is self-insured also has the option of reducing his or her insurance costs by increasing the deductible on some policies. For example, some drivers will drop collision insurance on an older car with a low Kelley Blue Book value in order to save money on premiums.
However, it is also important to note that if the driver experiences a large loss or multiple smaller losses within a short period of time, the nest egg could be depleted and the person would then have to turn to insurance to cover the expense.
Bulgaria has simplified the requirements for establishing a private limited company and foreigners can receive limited liability by registering an EOOD or, in the case of a single shareholder, an AD or EAD (joint-stock company). While OOD’s must conduct annual general meetings, an AOOD or EAD is not required to do so since there is only one shareholder. Shareholders can be natural persons or corporate entities and there are no restrictions on residency or citizenship. This makes Bulgaria an attractive destination for international business. However, it is important to note that foreigners who intend to open an EOOD should be aware of the country’s visa requirements.самоосигуряващо се лице или ЕООД