Insurance agents, financial planners and even accountants sold many of these plans. The main motivations for buying into one were large tax deductions. The motivation for the sellers of the plans was the very large life insurance premiums generated. These plans, which were vetted by the insurance companies, put lots of insurance on the books.
Some of these plans continue to be sold, even after IRS disallowances and lawsuits against insurance agents, plan promoters and insurance companies. Now many of the same people selling those scams are selling captive insurance.
The formation of a Captive Insurance Company (CIC) has become a common practice among both the Fortune 1000 and small and mid-sized companies, offering businesses an alternative to appropriately manage risk while at the same time taking into account future tax and business planning. With this growth of CICs, the IRS has begun tax shelter promoter examinations and has publicly stated their concern with captive insurance companies, going so far as to add captive insurance companies to the IRS's “Dirty Dozen” list of tax scams for 2015.