TAX EFFICIENT STATEGISTS & GLOBAL THINKERS
We are daily educators of the powerful tax efficiency found through life insurance solutions. We understand “tax drag”, both during accumulation and in the distribution phase of any asset. We will walk you through the steps of how PPLI could provide an answer to increasing portfolio IRR’s for your ultra-high net worth client. Additionally, with decades of collective international experience, we are center stage to global PPLI strategies and equally equipped to bring these to any internationally-focused firm. PPLI has its highest value at the $5M and greater investment levels, although lowered amounts are available.
AN ULTRA HIGH-NET WORTH FORMULA
For private placement’s advantages to take effect, several considerations are important:
- Specific requirements, falling broadly under three(3) categories, must be met when implementing a private placement life insurance plan:
- The Investor Control Doctrine;
- Diversification under IRC Section 817; and,
- Insurable Interest.
- To consider PPLI, prospective policy owners who are U.S. clients must meet the criteria for:
- An “accredited investor” (SEC Rule 501 of Regulation D); and,
- A “qualified purchaser” (Section 2(a)(51) of the Investment Company Act).
- PPLI was first introduced within the context of the U.S. corporate-owned life insurance (COLI) market as a tool to fund deferred-compensation obligations through extremely large institutional transactions. Offshore choices for highly affluent individuals were in focus next, spurred largely by increased investment flexibility, lowered costs, confidentiality, and superior asset protection. Domestic carriers soon mirrored similar offerings. Offshore insurance companies specializing in private placement life insurance often negotiate with high net worth clients as a provider of a financial service, rather than offering a product like that of a traditional insurance carrier. Generally, offshore carriers are not allowed to have a domestic sales force or solicit in the US. Wealthy foreign nationals (NRA’s) pursue both domestic and international PPLI strategies, with a recent increase in interest to acquire PPLI in a non-CRS (Common Reporting Standard) participating country, such as the U.S. or one of its territories.
Commonly called an “insurance wrapper”, Private Placement Life Insurance (PPLI) is an unregistered variable universal life insurance product designed to hold interests in various asset classes, including hedge funds, hedge funds of funds, and other alternative investments. By covering these assets in an insurance structure, PPLI has the power to convert highly inefficient taxable assets into favorable tax-efficient investments.