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  • Private Placement Life Insurance (PPLI) is a specialized form of variable life insurance that is tailored for high-net-worth individuals and is often used as part of advanced estate planning and wealth preservation strategies.

  • A PPVA is a type of variable annuity designed for high-net-worth investors. It combines the features of a variable annuity with the flexibility of private placements, allowing for a broader range of investment options.

  • PPLI offers more investment options, access to high return and high-risk investment options, negotiable fees, customization, and flexibility compared to traditional life insurance policies.
  • PPLI does not offer guaranteed low return on investment as a traditional whole life policy would do.
  • PPLI offers the same tax advantages, borrowing options and creditor protection as traditional permanent life insurance.

  • PPVA offers more investment options, access to high return and high-risk investment options, negotiable fees, customization, and flexibility compared to traditional variable annuities.
  • PPVA do not have surrender charges, which improves the liquidity of the product.
  • All other features of traditional annuities apply to PPVA.

  • PPLI can provide tax-free growth of cash value.
  • Tax-free withdrawals in the form of loans.
  • Creditor protection.
  • Tax-free death benefits.
  • It is often used to compensate the tax-inefficiency of certain investment strategies or asset classes.
  • PPLI death benefit can be structured to mitigate estate taxes, especially when the actual estate is not liquid, such as real estate, limited partnerships, shares in privately held corporations...
  • Very useful in estate planning and charitable giving.

  • Like traditional variable annuities, the assets within a PPVA grow tax-deferred until withdrawal.
  • Taxes are incurred only upon withdrawal, or during annuitization.
  • Only the income portion of withdrawals is taxable.

  • Yes. Various annuity payment options at the chosen retirement date are available like in any other annuity.

  • A diverse range of investment options is available on each insurance provider platform. They include IDFs, (Insurance Dedicated Funds), numerous traditional registered funds and separately managed accounts.
  • The funds follow various strategies, hedge funds, private equity, alternative investments, indexing, equity, bonds, real estate, derivatives, etc. They invest in all asset classes except cryptocurrencies.
  • The specific choices of IDF and registered funds vary among insurance providers.
  • Separately Managed Accounts. They allow for a fully customized investment strategy for which assets or funds outside of the insurance provider platform are available.
  • The variety of investment options allows for any investment strategy to be implemented in a tax efficient manner inside a PPVA or PPLI, including, capital preservation, growth, growth and income, aggressive growth, income, asset-liability management...

  • IDF are special investment vehicle that are only available for investments in PPLI and PPVA thru an insurance company.
  • They are legal entities and must meet certain diversification criteria set by the IRS to allow the tax advantages of PPLI and PPVA.
  • The asset of the funds is separate from the assets of the insurance company which protects them from an insurance company failure.
  • They can follow any investment strategy the fund manager wants and must be approved by the insurance provider for inclusion on its platform.
  • Once the IDF is on an insurance provider platform, it is available for subscription by any buyer of a PPLI or a PPVA.

  • Investments in PPLI or PPVA are structured the same way.
  • Premiums are typically paid in several installments.
  • The life insurance policy holder and/or annuitant invest the premiums in funds available on the insurance provider platform.
  • It is possible to invest thru a separately managed account, (SMA), set up specifically for a policy holder or annuitant. The annuitant or life insurance policy holder determines with his personal investment manager the investment strategy that the SMA will follow. In this instance, the investment manager can invest in assets or funds that are not on the insurance provider platform. The investment manager must have full discretion to implement the investment strategy defined on the SMA documentation.

  • PPLI and PPVA are available only to individuals who meet the definition of accredited investors and qualified purchaser. Typically, to be eligible to purchase or invest in a PPLI or a PPVA, one needs to have a minimum of 5 million dollar of investable assets, excluding the primary residence.

  • Yes, PPLI is often utilized for international estate planning.

  • Yes, policyholders can access the cash value of a PPLI through withdrawals and loans. Straight withdrawals are taxable, while loan proceeds are not. There is no timetable for the repayment of the loan. When the insured dies, any remaining loan amount plus interest is deducted from the death benefit paid to the beneficiaries.

  • Unlike traditional annuities, PPVA does not have surrender charges. It improves the annuity liquidity.
  • However, withdrawals before the age of 59 and half are subject to a 10% penalty.
  • Withdrawals are allowed. Only the income portion of the withdrawal is taxed.

  • PPLI is subject to insurance regulations.

When the premiums are paid, the following charges are deducted:
  • DAC tax. Deferred Acquisition Cost of insurance. It varies per insurance provider.
  • State premium tax which varies per state.
  • Premium based compensation for the advisor.
Over the life of the policy, the following expenses are incurred periodically as a percentage of the policy cash value:
  • Mortality and expense charge.
  • Cost of insurance.
  • Fees paid to the fund managers of the funds selected, IDF (insurance Dedicated Funds), Registered Funds and/or Separately Managed Accounts

  • Premium tax. They are only applicable in a few states. No premium tax in most states.
  • Upfront compensation for the agent.
  • Mortality and expenses charge which varies per insurance provider.
  • No DAC taxes.
  • Fees paid to the fund managers of the funds selected, IDF (insurance Dedicated Funds), Registered Funds and/or Separately Managed Accounts

  • PPVAs often offer death benefit options, allowing beneficiaries to receive a specified amount upon the annuitant's death.
  • The death benefit amount and payment option depend on the way the annuity is structured.
  • Unlike for a life insurance policy, it is never higher than the annuity cash value.
  • Death benefit is tax free when the beneficiary is a tax-exempt entity such as most endowments and charitable organizations.

  • Yes. The specific requirements vary among insurance providers and each investment option. Typically, a PPLI would require a minimum of 1MM, a PPVA would require a minimum of 500K.

  • The suitability of PPLI depends on individual circumstances, financial goals, estate planning needs, and risk tolerance. We offer free consultations.