PPLI vs. Typical Life Insurance
When purchasing typical life insurance, a client is looking to secure the largest amount of death benefit for the lowest price to secure his family’s estate upon his death. Private Placement Insurance is designed so the benefits are enjoyed while the client is living and to still provide for his family’s estate upon death.
Click to enlarge
Private Placement Life Insurance fees are generally lower than retail products and typically have no surrender charges. To qualify as a PPLI purchaser, prospective policy owners who are U.S. clients must meet the criteria for “accredited investors” and “qualified purchasers” under SEC rules
Most life insurance products with cash value features, allow the client to participate in earnings by the carrier either through dividends in the case of Whole Life, or participation against indexes in Universal Life. Variable Life Insurance allows the client to invest in various mutual funds. Private Placement Insurance, on the other hand, provides access to sophisticated and alternative investment classes typically used by high-net worth clients such as hedge funds, hedge funds of funds, commodities, real estate, and options at the lowest possible insurance costs. In a Private Placement Life Insurance Policy the client may designate a hedge fund or traditional money manager to manage his or her assets paid into the PPLI policy.
The tax-free accumulation of investment earnings, tax-free access to policy assets, and tax-free death benefit at institutional pricing provide an unparalleled planning tool for high-net worth individuals.