A Private Placement life insurance policy allows a sophisticated investor to capitalize on tax-free life insurance death benefits and tax-deferred growth of cash value, coupled with a completely open architecture from an investment perspective. Your independent financial advisors can construct a diversified portfolio of investments that they prefer, rather than select from a group of sub-accounts offered by commercial insurance carriers – managed within an Insurance Dedicated Fund (IDF) controlled by your independent fund manager. Clients with a buy and hold mentality have the ability to enjoy investment gains in a tax-deferred manner, ultimately paid to a beneficiary on an income tax-free basis. Policies qualifying as Non-MEC contracts may also provide tax-free policy loans during the insured’s lifetime.
PPLI policies must satisfy additional testing for control and diversification, in order to enjoy the same tax benefits as traditional cash value products. With that in mind, it is important to work with qualified legal and tax professionals to evaluate policy design and compliance requirements to satisfy your own situation.