It’s safe to say that every affluent person is likely to have monetary uneasiness that demand customized solutions for tax management, asset protection, estate planning, trust management and risk management. Private Placement Life Insurance (PPLI) could definitely be quite handy and useful in the said areas of concern.
What PPLI Does For Investors?
Private Placement Insurance is the latest novelty in the life insurance industry for super wealthy investors (persons having $10 million or more in liquid assets) looking for a feasible tax payback. Obviously, you would resent the fact that a greater percentage of your capital will go to the government. In order to preserve your assets, you have to go through many investment tools such as annuities, mutual funds, tax-free savings account etc, but in this case insurance wrappers like PPLI work the best. PPLI financial records/ accounts are made to meet the requirements of the affluent investors. The cash value of the policy can be invested in a number of strategies, such as private equity, hedge funds, real estate funds and the appreciation of that cash value is tax-free. The course of action may present other paybacks, for instance, estate tax minimization, asset protection and lower cost of the structure.
What is the cost of PPLI?
Assuming a lifetime investment, PPLI costs less than the taxes owed before the policy is acquired. It costs an average 1% of the cash value of the policy. This cost does not involve the fees of the investment manager and traditional agent commissions. Typically, PPLI is set up with an offshore (foreign) insurance company that further reduces the cost.
Chief Advantages of Private Placement Life Insurance:
Absolute Asset Protection: Separate accounts are maintained for every individual policy, which is exclusively for the policy holder’s advantage and is not conditioned to the claims of creditors.
Wealth Protection: Through advanced insurance law, an access to global investment markets is guaranteed, which helps to lower cost. Lately, private placement life insurance offers the best possible compliant wealth protection facility.
Privacy & Confidentiality: Several foreign authorities specify that insurance policies must be kept in strict confidence. Currently, private placement life insurance presents a high level of privacy and confidentiality.
Access to Worldwide Markets and the World’s most important Investment Managers: Foreign insurance carriers give flexibility with the location and kind of investments on hand as well as luring high performance renowned international investment managers.
Multiple Currencies: Foreign insurance delivery service usually offers premium payments, investments, withdrawals, borrowings, and death benefits in a range of currencies.
Estate Planning: Through appropriate structuring, private placement life insurance could be utilized as part of a family’s estate planning uniting estate, reward, and generation-skipping transfer tax benefits.
Flexibility: PPLI uses a wide range of strategies to manage investments. It is easy to change asset managers or advisors, and assets can be borrowed /withdrawn from the policy at a tax-free minimal cost. The policy can be surrendered anytime without incurring surrender charges that are often troublesome in retail life insurance policies.
Though we have tried to provide you the preliminary information, we suggest you to also consult with a professional financial group like Terry Sandvold to find the best option for your individual needs.