Private Placement Life Insurance (PPLI)
Private Placement Life Insurance (“PPLI”) and Private Placement Variable Annuity (“PPVA”) policies can invest, subject to limitations in various investment strategies designed specifically for high net worth investors, such as hedge funds and hedge funds of funds. PPLI and PPVA policies can also invest in currencies other than United States Dollars, hold gold and silver and both bankable and non-bankable assets.
PPLI provides our clients and partners access to a more efficient and flexible wealth planning tool. PPLI allows the use of specialized Insurance Dedicated Funds that can be created to invest in bankable and certain non-bankable asset classes that are not available from traditional carriers.
Our products are traditionally sourced and professionally vetted. Keep in mind PPLI does not mean “carte blanche” to re-write insurance contracts. Insurance contracts are written to a very strict compliance standard. Flexibility is provided within certain investment options but the “nuts and bolts” of the policies are dictated by the Internal Revenue Code (U.S. for example) and have very clearly defined coverage and death benefit parameters.
What are some of the PPLI benefits?
- Tax benefits
PPLI is a life insurance product, and therefore it has all the same tax benefits of life insurance, which include:
- tax-free growth of investment earnings (dividends, interest, and capital gain) on policy assets;
- the ability, with proper structuring, to withdraw and borrow assets from the policy cash value free of income tax; and
- the income tax-free receipt of death benefit proceeds to the policy beneficiaries at the death of the insured.
- Estate Planning
A properly structured life insurance policy can be used to mitigate potential estate tax charges. Life Insurance can be used to provide payment to beneficiaries of assets at the death of the insured. The death benefit of a PPLI policy can be free of any estate tax. The liquidity provided from the policy’s death benefit may be used to eliminate or mitigate the need to liquidate other family assets in order to pay estate tax.
- Asset Protection
PPLI can offer privacy and, in some cases, significant protection from creditors. Assets held in a private placement policy are held in a Separate Account and are protected from the assets of all other policyholders and the general account of the insurance Company.
PPLI and PPVA allow our clients access to investments and specialized funds that would not be typically available to purchasers of life insurance from domestic carriers. Further we provide much greater transparency with respect to fees and costs associated with the insurance and annuity products.