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.

Private-Placement-Life Insurance

Core Value:

  • 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).

Tax Benefits include:

  • 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).

What is Private Placement? Why use it?

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.

Private Placement has advantages including:

  • 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.

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