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:
- 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.
