Frequently Asked Questions

Private Placement Life Insurance is a life insurance product formally only available for high net worth investors.  Private Placement Life Insurance is an investment vehicle whose main goals are income, capital gains and estate tax savings along with asset protection, while maximizing investment choices and incurring as little insurance cost as possible.

The tax advantages of life insurance are the same whether the policy is acquired onshore or offshore. Policy loans are tax-free. There are enhanced tax and other advantages available with a Private Placement Life Insurance policy. See the basic PPLI structure here.

The core motivation for acquiring Private Placement Life Insurance is to establish a tax-free investment environment, at the lowest possible cost and in which an investor may designate a money manager to manage the policy assets. Visit Why PPLI? to learn more.

When investments that are not income tax-efficient (such as hedge funds) are held inside Private Placement Life Insurance its tax advantages enhance the performance of the underlying investments.

The PPLI structure allows policy owners to change fund managers and investment styles to meet their investment objectives by reallocating assets among investment funds available within the Private Placement Life Insurance contract.

PPLI is Asset Protected. Separate accounts established for each individual policy are not subject to the claims of either the insurance company’s creditors or claims against any other policyholder.

Private Placement Life Insurance Can Negate Fraudulent Transfer Attacks. As the purchase of a policy is an equal value for value exchange, it would be difficult to prove the transaction was fraudulent. 

Business Purpose. Was a transfer made solely to evade creditors or was there a business purpose? The business purpose for purchasing insurance is well recognized and respected - family protection and estate planning. There normally is no business purpose in setting up an offshore trust.

Acquiring PPLI requires that the prospective insured undergo medical and financial underwriting. In addition  there are several important insurance design elements that must be carefully addressed in the policy acquisition process.

The beneficiares will receive income tax-free death benefit.

The separate accounts of the policy will be held in accordance with the asset manager’s normal custodial arrangements. There is no requirement of offshore custody. 

The companies we use all have tax opinions explaining the legal and tax concepts of Private Placement Life Insurance and are available to policy purchasers.

The key components of Private Placement Life InsuranceI have been Court tested. Many IRS rulings and regulations have been issued resulting in straightforward rules and guidelines.

Private Placement Life Insurance is set up as Non Modified Endowment Contracts which allows for policy loans on a tax-free basis.

Through proper structuring, onshore PPLI can be used as part of a family’s estate planning combining estate, gift, and generation-skipping transfer tax benefits.

The type of investments that can be held in the segregated policy account is unlimited.   A manager, recommended by the client, may make all investment decisions.

Offshore carriers offer premium payments, investments, withdrawals, borrowings, and death benefits in a variety of currencies.