What is Private Placement Insurance
Invest tax-free and get the money
Private Placement Insurance is an exclusive type of life insurance tied to a range of possible investments.
Basically, private-placement insurance can be either in the form of life insurance or an annuity. For investment purposes, the policies are structured as a variable insurance product.
Since 1913, the Internal Revenue Code treats the income earned under an insurance policy differently from that of income from investments that are owned directly by the investor.
What type of Life Insurance is a Private Placement Insurance?
It is variable universal life insurance.
Variable universal life is one of the best tax shelters available.
It has a death benefit that can pass to heirs free of both income and estate taxes.
Premiums are funneled into a tax-deferred investment account, but most folks never pay taxes even if they want access to the assets.
That’s because premiums can be taken out tax-free, and you can get tax-free loans against the policy and not pay them back; any loan is eventually deducted from the death benefit.
Here’s how it works:
- Person A buys a life insurance policy that pays out to Person A’s heirs when Person A dies.
- Person A invests the insurance policy’s premiums in a pre-selected list of securities, hedge funds, and other assets that the insurance company decides. Person A cannot invest the premiums in assets that are not on the insurance company’s pre-selected list.
- The insurance policy’s payout is tied to the performance of the investments in the policy. (As you can see, this “insurance policy” is in reality nothing more than a facade for the investments within the policy.)
- The capital gains from investments within the policy aren’t taxed, which means that the value of the policy grows tax-free. There are no withholding or capital gains taxes on the investments within this insurance policy. The value of the policy is paid out to Person A’s heirs when Person A dies.
Private placement life insurance policies allow the policy holder to change investments while the insurance policy is still active.
Insurance companies only sell a few billion dollars worth of private placement life insurance policies every year.
Which Insurance Companies sell it?
Many investors who are aware of PPLI have heard of it in the context of offshore life insurance. It is important to note that these policies are offered by AAA-rated companies both within the U.S. and without.
Insurance companies and boutique firms sell private placement life insurance policies.
Private Placement Life Insurance is essentially an investment portfolio that exists inside of a life insurance policy.
By building an investment portfolio inside of an insurance policy in a regulatory-friendly jurisdiction our clients are able to transfer the entire appreciated value of their portfolio to their heirs with no income, gift, estate, or generation-skipping taxation whatsoever.
It is one of the most advanced wealth transfer devices available as well as the only one that intentionally allows for the complete avoidance of any form of taxation.
The Internal Revenue Service is well aware of these kinds of arrangements and has not raised any objections.
If you are interested in private placement life insurance, call us today at 813 964 7100 or email us at firstname.lastname@example.org
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New York 716 565 1300