Private Placement Life Insurance
(PPLI)
I.R.C. § 7702
What is a Private Placement Life Insurance?
Private Placement Life Insurance (“PPLI”) is a form of variable universal life insurance having two components, an investment account and a death benefit. Private Placement Variable Annuity (“PPVA”), is a form of a variable annuity, and is a life insurance contract whose investment account value fluctuates with the portfolio of underlying assets. Both are offered privately to Accredited Investors and Qualified Purchasers.
Core Value of Private Placement Life Insurance
- Primarily, it is an investment-oriented opportunity and decision, as it establishes a tax-free investment environment at a very low cost where there are a number of investment alternatives. ENSPIRE’s product lets the Investment Advisor manage the assets paid into the insurance policy (PPVUL & PPVA).
- The death benefit value of the policy is generally considered a secondary benefit (PPVUL only).
A Simple Way to Understand
Private Placement Life Insurance
- Private Placement Life Insurance, or PPLI, is a special life insurance policy made for wealthy investors that wraps investments inside a tax-friendly shell
- Think of it like a lunchbox that keeps your snacks fresh, the policy holds your investments and protects them from taxes while they grow
- The money inside grows tax-free, and your loved ones receive the payout tax-free when you pass away
- It can hold investments you usually cannot put in a regular insurance policy, like hedge funds or private deals
- Because it is built for large amounts, PPLI is mainly used by accredited investors looking for tax-efficient growth and a legacy plan
The Tax Benefits of Private Placement Life Insurance?
- Tax-deferred earnings – dividends, interest, and capital gains (PPVUL & PPVA).
- Tax-free access to cash value through withdrawals up to cost-basis (PPVUL only).
- Tax-free access to cash value through policy loans (PPVUL only).
- Policy beneficiaries receive policy proceeds on a tax-free basis at the death of the insured (PPVUL only).
Why Use PPLI?
Private placement (or non-public offering) is:
- The offering and sale of a security by a brokerage firm not involving the general public, but rather through a private offering, mostly to a group of sophisticated investors who are categorized as Accredited Investors or Qualified Purchasers.
- Available in many forms, the type reviewed in this Learning Center is offered under the SEC Rules known as Regulation D, rule 506.
Some Advantages of Private Placement Life Insurance Include
- Often less complexity than a registered product.
- Often less costly to implement and maintain.
- Less burdensome regulatory requirements.
- Bespoke Solution – custom designed for each individual investor.
If you have any questions, feel free to reach out to us! We are happy to assist. Call 781-235-4426 or CLICK HERE
