A uncommon feature of Private Placement Life Insurance (PPLI) is it is a personalized policy wherein the owner can, within a couple parameters, pick the money manager and the investment direction. All policy premiums less insurance costs and commission are positioned in a separate account managed by the money manager. Essentially the worth of the policy is the amount of the investments plus the additional value as a result of the death benefit.

Since an offshore private placement life insurance policy has large amounts of investment funds the level of asset protection provided to the policy is really valuable. Life insurance at present receives a level of asset protection in the US against the claims of creditors. Such statutory certainty can operate during the life of the insured and after their dying. It may take care of the insured’s ownership in the policy, the beneficiaries share in thedeath claim, interest’s of other parties in the policy or an aggregate. in several states the protection might be bound to a predetermined number and in every state there are exceptions enabling creditors to attack policy wealth.

In comparison, a properly established PPLI policy in a jurisdiction including clear asset protection laws can provide a much higher layer of protection for life insurance. There are a number of transfer tax planning options that might be exploited using PPLI, counting the minimization of transfer tax liability through an alternative premium paying arrangement.

The PPLI policies are solely accessible to high net worth individuals. To acquire the policy requires the outlay of large upfront premiums usually all paid in the first 5 years of the policy. To acquire such a policy in a highly regulated jurisdiction like the US may demand significant minimum premium commitments of approximately $5 Million over 5 years. In comparison, offshore jurisdictions like Bermuda, one of the larger insurance industries in the world, have assembled a cost effective environment to purchase PPLI for as little as $1 Million paid over five years.

The insurance expenses and commissions for PPLI are relatively insignificant particularly when the policy is purchased offshore. The price of PPLI purchased offshore is in most cases under 1% per annum. There are also upfront insurance commissions to bear in mind of approximately 1% of the premiums paid. Other costs include the cost of hiring specialist to draft the documents who will be responsible for dealing with an extensive range of issues including the life insurance planning and tax compliance. This cost is frequently charged on a time cost basis or can be performed as a fixed expense.

To conclude, PPLI can be exploited to optimize returns on long term investments, ensure investments are protected and further the clients estate planning and wealth preservation goals. It is an option well worth looking into when helping a client with their estate planning and wealth preservationgoals. It is valuable to identify the correct private placement life insurance carriers.