What Is Private Placement Life Insurance (PPLI)?
PPLI is a life insurance product designed for high net worth investors. As a result of the reduction in investment return due to taxes, I am often asked about tax–advantaged investment structures. By virtue of the powerful lobbying influence of the life insurance industry, insurance has had a long history as a tax–advantaged investment vehicle. Insurance carriers both inside and outside the U.S. offer customized PPLI policies that are fully compliant with U.S. tax rules and are therefore fully entitled to the preferential tax treatment enjoyed by life insurance. A U.S. tax compliant life insurance policy represents a conservative and cost effective investment vehicle. PPLI offers investors the ability to select asset managers. Retail insurance product does not. This is attractive to high net worth clients because they want investments that involve more sophisticated strategies than traditional “long only” mutual fund investing. Their motivation for investing in PPLI differs substantial
